LIBRARY OF CONGRESS. 

Chap. Coimight i\o. 

8]ielf.J\[_n.5 



UNITED STATES OF AMERICA. 



JAN 9 m 



THE POSTAL DEFICIT 



AN EXAMINATION OF SOME OF THE LEGISLA- 
TIVE AND ADMINISTRATIVE ASPECTS 
OF A GREAT STATE INDUSTRY 



BY 

•/ 

H. T. NEWCOMB 

Author of " Railway Economics ; " Expert Chief of Division in 

the Office of the Twelfth Census ; Secretary of the 

Section on Economic and Social Science of the 

American Association for the Advancement 

of Science ; Member of the American 

Economic Association ; Fellow of 

the Royal Statistical 

Society, etc. 



WASHINGTON 

WM. BALLANTYNE & SONS 

1900 

1 



4251 

Library of Cooflre* 

Two Cop(£s Reaiv^o 
JAN 9 1901 

SECOND COPY 

Oe<(v«red to 

ORDER DIVISION 

LJAN31 1901 



X15 



Copyright, 1900, 
By H. T. NEWCOMB 



PEESS OF JUDD k DETWEILER 
WASHINGTON, D. C. 



PREFATORY NOTE. 



This paper was prepared early in the year 1900, and 
in its original form was submitted to the American 
Association for the Advancement of Science, during 
the annual meeting held at New York, in June, 1900. 
The subject was of such interest to the writer and the 
developments of the controversy concerning railway 
mail compensation Became so important that he de- 
termined to undertake its revision. 

The present paper, although considerably increased 
in bulk, and including accounts of incidents that have 
occurred since the original was prepared, is the result 
of that revision. 

H. T. N. 

Census Office, December, 1900. 



CONTENTS. 

Page 

I. Introductiox 7 

A. Extent of the postal service 8 

B. The postal principle 8 

II. The Deficit 9 

A. Should the postal service be self-supporting?. . 11 

B. Excess of expenditures over revenue 12 

C. How a deficit can be prevented 14 

III. Railway Mail Pay 15 

A. Railway services in connection with mail trans- 

portation 20 

a. Postal and compartment car service. . . 32 

b. Traveling post-offices 40 

c. Messenger service 49 

d. Special station services 54 

e. Records and reports required 56 

/. Free transportation of persons and 

property 56 

g. Risk assumed by railways 58 

h. Railway services summarized 60 

B. Railway compensation 61 

a. Weighing 69 

b. Decline in rates for railway mail service. 75 

C. The attack on the present system 84 

a. Mr. Finley Acker 85 

b. Mr. James Lewis Cowles 89 

D. The investigation 91 

a. The Adams report 92 

6. Fundamental principles 119 

c. The principle of public utility 121 

d. The principle that density of traffic 

enables economies 130 

e. Reductions recommended by Professor 

Adams 137 

/. Further investigation recommended by 

Professor Adams 145 

g. General review of Professor Adams' re- 
port 147 

h. Summary 149 

E. General conclusions concerning railway mail 

pay 149 

IV. General Conclusions 155 



THE POSTAL DEFICIT. 



The people of the United States can justly take 
great pride in the postal system which they have 
established. The organization of the Post-office De- 
partment extends over a vast continental territory, 
throughout which there is practically no community 
too small and no hamlet too remote from the great 
centers of population, or from the ordinary means of 
transportation, to receive regular and reliable mail 
service. Within recent months there has been a 
great extension of the postal agencies, and at the 
present time the two-cent stamp will carry a letter 
from Manila or San Juan, in the tropics, to the min- 
ing camps of Alaska, in the vicinity of the Arctic 
Circle. 

The extent of the utilization of these postal facil- 
ities is probably without a parallel elsewhere on the 
globe, and the figures necessary to express it are 
scarcely within the limits of human comprehension. 
The following data are from the latest report of the 
Third Assistant Postmaster General of the United 
States : 



O THE POSTAL DEFICIT. 

Number of Pieces Mailed During the Year 
Ended June 30, 1899. 

Description. Numbees.* p^fcTpi'lt 

Letters and other matter sent at 

letter lates 2,917,000,000 39.42 

Letters and other matter as official 

business, free 98,092,000 1.33 

Postal cards 573,634,000 7.75 

Newspapers and periodicals paid, 

at pound rates 1,447,013,000 19.55 

Newspapers and periodicals, free * 

within county of origin 622,417,000 8.41 

Newspapers and periodicals, paid 

at transient rates 104,286,000 1.41 

Books, pamphlets, circulars, and 

miscellaneous printed matter. . 747,695,000 10.10 

Merchandise, seeds, plants, etc. . 66,173,000 .89 

6,576,310,000 88.86 

THE POSTAL PRINCIPLE. 

The expansion of the postal system in the degree 
indicated by the foregoing has been accomplished by 
the observance of the principle which, regarding the 
object of the postal business as the distribution of 
intelligence, assumes that it is of the highest social 
utility and importance, and that consequently it is 
perfectly legitimate to disregard the cost of the par- 

^Annual Report of the Post-office Department for the year 
1899, page 753. 

t Calculated from the foregoing on the basis of 74,000,000 
population. 



THE POSTAL DEFICIT. 9 

ticular services performed in fixing the specific rate 
to be applied to each. In the application of this 
principle, rates vastly in excess of the cost of service 
have been charged for local services in the more 
densely populated regions, while mail has been car- 
ried over great distances and in sparsely inhabited 
regions at rates so insignificant in comparison with 
the cost that the relations cannot be expressed .in 
numbers that convey definite meanings. 

In other words, the people of the United States 
have deliberately placed a tax upon a very large pro- 
portion of the mail carried in order that postal facil- 
ities might be extended and the distribution of in- 
telligence made cheap and effective in localities 
where remunerative rates would be prohibitive. It 
may fairly be assumed that this practice has sub- 
stantially the unanimous approval of the people, for 
though it is as thoroughly understood as any of the 
methods of the Government, there is scarcely a scin- 
tilla of evidence that it is condemned by any one. 
The citizens of the city of New York, whose mail 
traffic is immensely profitable, have never protested 
because the revenues to which they contribute so 
generously are diverted to the support of the ex- 
tremely costly services that are rendered in Alaska 
and in the panhandle of Texas. The average cost 
of sending each of the letters composing the first lot 
of mail sent to Circle City, Alaska, is reported as 
$450, in return for which the Post-office Department 
received only the price of a two-cent stamp, the same 
amount that carries a letter from the Battery to 
2 



10 THE POSTAL DEFICIT. 

Harlem, in New York city. On the other hand, 
while the average amount collected on each pound 
of letter mail is over eighty cents, the excess over 
the rate of two cents per ounce, or thirty-two cents 
per pound, being attributable to the fact that letters 
rarely reach the prescribed limit of weight, there are 
dense railway routes on which the payment for mail 
transportation averages less than thirty-two cents pei^ 
hundred pounds, or about seven one-thousandths of 
one cent per letter. Of course this is not all of the 
expense, but under such conditions the profit on each 
letter cannot be less than 1,000 per cent. It is this 
profit which the people willingly divert to the pay- 
ment of the expenses of mail, service in sparsely set- 
tled regions and those incurred for bulkier and less 
remunerative kinds of mail traffic. 

The explanation of this general acquiescence in a 
system by which the business of many is taxed to 
provide facilities where they are without commercial 
justification is not found in any impulse of altruism, 
but rather in the fact that the amount paid for postal 
services constitutes a negligible proportion of the 
aggregate expenses of most industrial enterprises. 
Whenever this is not the case and the exceptions are 
absolutely confined to industries which make large 
use of the mail for forwarding second and fourth 
class matter, there is probably a ver}^ lively appreci- 
ation of the fact that the rates paid are far below the 
cost of the service. Those who are thus consciously 
receiving what amounts to a public subsidy in aid 
of their business doubtless feel that complete silence 



THE POSTAL DEFICIT. 11 

in regard to the principle which has been, perhaps 
erroneously, extended so as to permit the distribu- 
tion of the cost of the mail service among all classes 
of matter carried, as well as among all regions served, 
without regard to specific costs, best serves their own 
interests. 

SHOULD THE POSTAL SERVICE BE SELF-SUPPORTIXG? 

If the mail service of the United States is to be 
conducted in accordance with the principle just out- 
lined, it is a little difficult to understand the grounds 
upon which it can be urged that tlie revenues de- 
rived from it should be invariably equal to the ex- 
penditures which it requires. If it is proper, as is 
admitted without perceptible objection, to tax heavily 
the mail of 90 per cent of the population in order 
that the facilities supplied to the remainder shall be 
greatly in excess of their ability or willingness to 
pay, there would appear to be little harm in impos- 
ing a small general tax in order to offset a slight 
diff'erence between receipts and expenditures. It is 
clear that in a business of such magnitude and 
changing volume it would be impossible to maintain 
an absolute balance. The choice, therefore, is be- 
tween a surplus and a deficit, and rather than add 
to the taxation already laid upon those who contrib- 
ute most to postal revenues, there seem to be many 
reasons for preferring the latter. Yet it would be 
unwise not to recognize the existence of a sentiment 
which demands that the mail service be made fully 



12 



THE POSTAL DEFICIT. 



self-supporting. In deference to this sentiment, it is 
well that the friends of the postal establishment 
should examine its operations and seek to determine 
whether any modification of the methods now in 
vogue which can be adopted without public detri- 
ment will insure a more generally satisfactory rela- 
tion between its income and its expenditures. 

THE EXCESS OF EXPEXDITURES OYER REYEXUE. 

The most concise and satisfactory recent statement 
of the financial operations of the Post-office Depart- 
ment, with a Yiew of developing the extent of the 
annual deficit, was presented to the National House 
of Representatives on March 22, 1900, by Honorable 
W. W. Moody, of Massachusetts. * 

The following data are from the statement re- 
ferred to : 



Year ended 
June 30. 


Keceipts. 


Expenditures. 


Deficit. 


1890 


$60,882,097.92 
65,931,785.72 
70,930,475.98 
75,896,933.16 
75,080,479.04 
76,983,128.19 
82,499,208.40 
82,665,462.73 
89,012,618.55 
95,021,384.17 


$66,259,547.84 
73,059,519.49 
76,980,846.16 
81,581,681.33 
84,994,111.62 
87,179,551.28 
90,932,669.50 
94,077,242.38 
98,033,523.61 

101,632,160.92 


$5,-377,449.92 


1891 


7,127,733.77 


1892. 


6,050,370.18 


1893 


5,684,748.17 


1894 


9,913,632.58 


1895 

1896 


10,196,423.09 
8,433,461.10 


1897 


11,411,779.65 


1898 

1899 


9,020,905.06 
6,610,776.75 



■^Congressional Record, Fifty-sixth Congress, first session, 
March 27, 1900, pp. 3612-3613. 



TPIE POSTAL DEFICIT. 



13 



The foregoing shows the deficit carried upon the 
books of the Department, but this is considerably 
lower than tlie actual deficit, on account of facts that 
were fully explained by Mr. Moody. 

Certain obligations incurred by the Post-office 
Department to the Pacific railroads were not charged 
against the postal revenues, because they were cred- 
ited by the Treasury Department on the debts of 
those railways to the Government. Similarly, the 
salaries of the employes of the executive department 
charged with the duty of auditing the accounts of 
the postal service; and the salaries, contingent ex- 
penses, printing, and binding of the Post-office De- 
partment are not, according to the book-keeping 
methods in vogue, included in the foregoing. 

The following statement represents more accu- 
rately, therefore, the true deficit of the years in- 
cluded : 



Year ended June 30. 


Book-keep- 
ing deficit 
as given. 


Amounts 
earned by- 
Pacific rail- 
ways. 


Salaries, etc. 


Total. 


1890 

1891 


$5,377,449.92 
7,127,733.77 
6,050,370.18 
5,684.748.17 
9,913,632.58 

10,196,423.09 
8,433,461.10 

11,411,779.65 
9,020,905.06 
6,610,776.75 


$1,207,401.80 
1,336,430.91 
1,808,154.09 
1,627,422.11 
1,628,770.09 
1,648,997.90 
1,558,898.69 
1,573,889.08 
604,700.42 
596,941.97 


$1,631,030.72 
1,644,724.00 
1,680,670.00 
1,690,580.00 
1,693,911.00 
1,693,151.00 
1,644,090.00 
1,645,070.00 
1,648,840.00 
1,662,539.00 


$8,215,882.44 
10,108,888.68 
9,539,194.27 
9,002,750.28 
13,236,313.67 
13 538 571 99 


1892 


1893 


1894 


1895 ... 


1896 


11,636,449.79 

14,6.3(1,738.73 

11,274,445.48 

8,870,257.72 


1897 


1898 


1899 





Strictly speaking, even the foregoing totals are 
lower than the facts, for they include no interest 



\ 



14 THE POSTAL DEFICIT. 

upon tlie value of the buildings owned by the Gov- 
ernment and devoted, rent free, to the postal service. 
There can be little harm, however, in adopting Mr. 
Moody's suggestion and regarding the rental of these 
buildings as payment for the mail matter carried 
without payment of postage, under the official pen- 
alty envelopes. 

HOW A DEFICIT CAX BE PEEVEXTED. 

There are, at least, three directions in which the 
solution of the problem thus outlined may be sought. 
It is conceivable that means might be found for : 

(a) Increasing the postal revenues without increasing 
its business or expenditures. 

(h) Decreasing the expenditures without decreasing 
the business or the receipts. 

(c) Either increasing or decreasing the business so 
as to secure correlative modifications in both 
receipts and expenditures that would result in 
an approximate balance between them. 

It is evident, also, that the adjustment might be 
attempted by any possible combination of these dis- 
tinct means. 

The practicability of the means first suggested does 
not appear to have received much, if any, attention 
from the officers of the Post-office Department or the 
members of the postal committees of the Federal 
Senate and House of Representatives. It will be 



THE POSTAL DEFICIT. 15 

passed for the present with the mere observation that 
it is by no means evident that there would be any 
material diminution in that portion of the enormous 
second-class mail traffic which is from every point 
of view^ least beneficial and desirable even though 
the charges were very considerably advanced. The 
evident satisfaction with which the publishers of the 
periodicals which make up this portion of the mail 
receive accessions to their " subscription " lists, which 
bring no revenue whatever, and the extent in which 
they make use of sample copies that are clearly not 
expected to increase their permanent mailing lists, 
suggest that they could affbrd to pay somewhat more 
for the postal facilities which they use so extensively. 
It is also possible that greater revenue could be se- 
cured, without reducing the volume of fourth-class 
matter, by a nearer adjustment of the charges on 
merchandise carried by mail to the value of the 
services rendered. 

RAILW^AY MAIL PAY. 

Most of the propositions that have received at all 
general consideration have been directed toward the 
reduction of expenditures. The proposals which in- 
volve the greatest aggregate curtailment of expendi- 
tures relate to the payments to railway companies for 
the transportation of mail. 

These proposals have the merit of simplicity, and 
derive some plausibility from the fact that the ex- 
penditures for railway transportation constitute the 



16 THE POSTAL DEFICIT. 

largest single item in the annual budget of the Post- 
office Department. The relation of these expendi- 
tures to the total for the year ended June 30, 1899, 
was as follows : "^ 

Total expenditures $101,632,160.92 

Payments to railways 35,759,343.92 

Percentage of total paid to railways 35.19 

The following statement shows, according to the 
best data available, the amount of annual mail trans- 
portation performed by the railways during each 
year from 1873 to 1898, inclusive, the total rate of 
payment for each year, and the average rates per ton 
per mile . f 

The following data are from the report rendered 
to the Joint Postal Commission by Professor Henry 
C. Adams, and, for reasons connected with the 
methods of determining weights of mail to be used 
as the basis of railway pay, which will be fully ex- 
plained hereafter, invariabl}^ understate the actual 
movement of mail via the railways and correspond- 
ingly exaggerate the rate of payment per ton per 
mile. With this qualification, they may be assumed, 
for the present, to be correct, it being understood, 
however, that the error makes the showing less favor- 
able to the railways than would otherwise be the 
case. 

*Annual Report, of the Postmaster General for year ended 
June 30, 1899, pp. 26, 27. 

t Testimony taken by the Commission to Investigate the 
Postal Service, Part 11, p. 253. 



THE POSTAL DEFICIT. 



17 



Year ended June 30. 


Total mail 

transportation 

reduced 

to ton-miles. 


Annual rate 

of pay- 
ment to rail- 
ways. 


Average 

rate 

per ton 

per mile. 


1873 

1874 

1875 

1876 

1877 


24,687,928 

31,911,945 

34,168,600 

36,229,459 

37,640,986 

39,755,061 

44,428,619 

47,111,138 

55,746,705 

63,211,781 

72,444,857 

80,277,597 

89,526,808 

96,365,803 

104,088,196 

112,830,405 

128; 186, 659 

142,024,571 

161,989.694 

179,062,188 

203,195,521 

226,021,821 

240,638 449 

246,062,726 

266,805,885 

272,714,017 


$6,522,725 

7,573,627 

8,153,554 

8,686,358 

9,018,844 

9,210,268 

9,562,187 

9,708,141 

10,574,672 

11,293,573 

12,915,639 

14,185,720 

15,888,140 

15,888,290 

17,236,659 

18,856,238 

20,069,669 

21,258,428 

23,954,253 

25,881,008 

28,398,738 

30,114,725 

31,545,392 

31,901,124 

83,780,087 

34,273,431 


cts. 
26 420 
28.732 
28.866 
23.975 
28.960 


1878 


23.167 


1879 


21.522 


1880 

1881 

1882 

1883 


20.596 
18 969 
17.866 

17.828 


1884 


17.670 


1885 

1886 

1887 


17.182 
16 487 
16.567 


1888 

1889 

1890 

1891 


• 16.268 
15.656 
14.968 
14.787 


1892 


14.453 


1893 

1894 

1895 

1896 


13.973 
13.323 
13.109 
12.964 


1897 


12.665 


1898 


12.567 



From the foregoing statement it appears that, 
measured in the manner indicated, the amount of 
mail transportation annually furnished by the rail- 
ways increased, from 1873 to 1898, 1004.65 per cent, 
while the revenue received therefrom by the railways 
increased only 425.45 per cent. In other words, 
railwa}^ mail transportation increased elevenfold and 



18 



THE POSTAL DEFICIT. 



railway mail pay but fivefold. The average rate per 
ton per mile, according to these data, declined 52.43 
percent. From 1890 to 1898 the total transporta- 
tion increased 92.02 per cent, railway pay 61.22 per 
cent., and the average rate decreased 16.04 per cent. 
These data indicate that the railways at the end of 
the period named performed for an average payment 
of 47.57 cents services for which the average pay- 
ment in 1873 was one dollar, and that the latter sum 
was paid in 1890, where the expenditure in 1898 was 
but 83.96 cents. It will be interesting to compare 
with these reductions those in payments for other 
railway services. The following presents such a 
comparison : 





Average rate per mile 
carried. 


A verage rate of 

J 898 com- 
pared with — 




1873. 


1890. 


1898. 


1873. 


1890. 


Passengers per pas- 
senorer 


cts. 

2.851 

1.850 

26420 


cts. 

2.167 

.941 

14.968 


cts. 

1.973 

.753 

12.567 


% 

69.20 
40.70 
47.57 


% 
91 05 


Freight per ton 

Mail per ton 


80.02 
83.96 



If the units adopted in the foregoing accurately 
measure the services to which they are respectively 
applied, it ai;)pears that the average charge for car- 
rying mail has declined much more rapidly than 
that for carrying passengers and a little less rapidly 



THK POSTAL DEFICIT. 19 

than that for carnang freight. In tliis connection, 
the fact that mail is alwa^^s carried at the speed 
adopted for passenger service, and a large proportion 
upon trains especially provided for mail service, 
which take little or no other traffic, should not be 
forgotten. 

The best that can be said for the ton-mileage unit 
as applied to mail service is that under current con- 
ditions of postal development it establishes the mini- 
mum limits of the increase in the aggregate of the 
services performed. These services are not suscepti- 
ble of accurate measurement by such a unit, and 
the results of such measurements cannot be com- 
pared with statements of freight movement expressed 
in ton-miles with sufficient precision to warrant very 
definite conclusions. It would be impossible to ex- 
press too strongly the fact, which has apparently 
been overlooked by some of those who have discussed 
railway mail pay, that the ton-mileage unit is a very 
different thing when applied to mail transportation 
than the unit known by the same name that is ap- 
plied to freight traffic. The nominal similarity is 
nothing more than a source of confusion, for the re- 
quirements of the different services are so diverse 
that only the most general comparisons can be at- 
tempted with safety. The ton-mile of mail implies, 
usually, among other things, a passenger mile trav- 
eled by a postal clerk, and from one-third to an entire 
car-mile traversed by a postal car. These are its nearly 
invariable adjuncts, and, with others, they are multi- 
plied in almost exact proportion to the multiplication 



20 THE POSTAL DEFICIT. 

of this kind of ton-mileage. The foregoing compar- 
isons do show, however, that an argument in favor 
of the reduction of the compensation now accorded 
to railway companies for the carriage of mail cannot 
'properly be based upon the contention that there 
has not been a decline in the rate paid for such serv- 
ice that is at least equal to that which has taken place 
in the average chargesfor passenger and freight serv- 
ices. They do not show that, if accurate comparisons 
were practicable, it would appear that, for equal 
services, the average freight rate has declined more 
rapidly than the average mail rate, nor that the re- 
verse is not the case. Much less do they indicate 
anything in regard to the relative justice of the 
charges imposed upon the different services. 

RAILWAY SERVICES IX COXXECTIOX W^ITH MAIL 
TRAXSPORTATIpX. 

In order to furnish a basis for further examination 
of the conditions of railway mail service and for 
intelligent conclusions concerning what constitutes 
reasonable compensation for those services, it is de- 
sirable to explain in some detail the character of the 
facilities which the railways supply, the nature of the 
services which they perform, and the extent of the 
requirements of the Post-office Department in con- 
nection therewith. 

What are the services represented by the 272,714,017 
ton-miles that represent the railway mail transporta- 
tion of 1898 for which the railwavs received more 



THK POSTAL DEFICIT. 



21 



than $34,000,000, or an average of twelve and one- 
half cents per ton per mile ? 

In order to throw additional light upon the char- 
acter and extent of these services, the Post-office De- 
partment conducted a special weighing throughout 
the United States, which was continued during a 
period of thirty -five consecutive days. On the basis 
of this weighing it was estimated that the total 
amounts of the diff'erent classes of mail sent to rail- 
roads during the year were as follows : 



Character. 


Pounds. 


Per cent, of all 
mail of same 
class. 


First class 


72.637,586 
40i;790,269 
125,838,025 

86,466,748 

652,063,970 

8,348,582 


76.55 


Second class. 


94.06 


Third and fourth classes 

Government matter 


86.26 
89.94 


Equipment 


81.34 


Foreign mail 


100.00 






Total . . 


1,347,145,180 


86 04 







While this quantity of mail, amounting in the ag- 
gregate to 673,572 tons, is a relatively small portion 
of the total traffic annually carried by American rail- 
ways, the manner in which it is transported, the facil- 
ities required for its accommodation, and the extra- 
ordinary services performed in connection with it 
make it a very significant factor in railway business. 

All mail delivered to railways is carried on pas- 
senger trains or on special mail trains run at pas- 



22 THE POSTAL DEFICIT. 

senger-train speed, and may be regarded, from the 
point of view of the postal service, as of two classes, 
viz., that which is distributed previous to delivery to 
the railways and carried in closed pouches, and that 
which is distributed during the process of transpor- 
tation. With regard to the latter class, there is an 
important classification depending upon whether the 
distribution is performed in compartments in bag- 
gage cars, or in full postal cars run exclusively for 
the transportation of mail. 

According to Mr. Victor J. Bradley, Superintendent 
of Railway Mail Service for the Middle States, an ac- 
tual computation, covering 221 railway mail routes in 
the Middle States division, being all routes on which 
postal or compartment cars were run, showed in 1897 
that 80.26 per cent, of the total weight of mail car- 
ried over those routes was carried in cars provided 
wdth space and facilities for its distribution while in 
transit. On this basis Mr. Bradley estimated that 
seventy -five per cent of the mail carried in that divis- 
ion was carried in postal or compartment cars, and 
that, as there is more closed pouch mail in the second 
division than elsewhere, the percentage for the entire 
country must be about eighty-five. 

The following statement shows the mail traffic car- 
ried on certain important routes, reduced to pounds, 
carried the full length of each route per day, and the 
proportions carried in each manner : 



THE POSTAL DEFICIT. 



23 





is 

^ o 

It 


Per cent, carried— 


Route between- 


CO 
O cS 

1^ 


Subject to distribu- 
tion in transit in— 




Apartment 
cars. 


Full postal 
cars. 


New York and Philadelphia 


309,294 
183.876 
105,007 
84,517 
83,058 


14.7 

5.1 

.3 

1.5 

.5 


3.4 

3.1- 

.9 

.8 
.8 


81 9 




91.8 


Pittsbui'g and Columbus 


98 8 


Columbus and Indianapolis 

Indianapolis and East Saint Louis... 


97.6 
98.7 



In spite, however, of the preponderance of mail in 
postal and compartment cars, the diffusion of the 
balance among numerous trains makes the closed- 
pouch service one which involves considerable labor 
upon the part of railway officers and employes. 
Some idea of the extent of this diffusion can be gath- 
ered from the fact that in the Middle States, in 1897, 
when the number of mail trains per diem was 4,576, 
but 617 of this number included postal or compart- 
ment cars, leaving 3,959 daily trains on which the 
mail was carried in baggage cars. During the year 
1897, 2,654,597 pouches of mail were handled by 
railwa}^ employes on the Chicago, Burlington and 
Quincy railroad. 

Similar data regarding other routes are not avail- 
able, but it is in evidence that 14.2 per cent of pas- 
senger-train space on the Atchison, Topeka, and 
Santa Fe railroad is occupied by mail; 12 per cent 
on the Gulf, Colorado, and Santa Fe ; 11 per cent on 



24 THE POSTAL DEFICIT. 

the Santa Fe Pacific, and 10 per cent on the 
Southern California. One-quarter of the space in 
each baggage car leaving the Grand Central station, 
in New York city, according to ^h\ Van Etten, of the 
New York Central and Hudson Kiver railroad, is 
occupied by mail. 

The Government asserts the right with regard to 
all classes of mail, whether letters, newspapers, mer- 
chandise, weekly, monthly, or quarterly periodicals, 
to the best service which it is physically possible for 
the railways to render. Mail must be carried on any 
train selected by the Post-office Department regard- 
less of any inconvenience entailed upon the carrier 
or any difficulties that must be overcome. No state- 
ment of this fact can be stronger than the language 
of the law, which is as follows : 

" The Postmaster General shall, in all cases, decide upon 
what trains and in what manner the mails shall be conveye<l." 

. . . . " Every railway company carrying the mail shall 
carry on any train which may be ran over its road and with- 
out extra charge therefor, all mailable matter directed to be 
carried thereon, with the person in charge of the same." .... 
"And if any railroad company shall fail or refuse to transport 
the mails, when required by the Post-office Department upon 
the fastest train or trains run upon said road, said company 
shall have its pay reduced fifty per centum of the amount pro- 
vided by laWi" 

It naturally follows from the application of the 
principles w^hich form the basis of the legislation 
quoted that the postal service makes use of every 
train which can in any way promote the rapid hand- 
ling of the mail. This involves the utilization of 
almost ever}^ passenger train traversing any part of 



THE POSTAL DEFICIT. 



25 



the 176,727 miles of railway that have been desig- 
nated as constituting postal routes. Thus there were, 
in 1897, 140 trains per day carrying mail on the route 
between New York and Philadelphia; 111, between 
Philadelphia and Pittsburg ; 85, between Philadel- 
phia and Washington ; 68, between New York and 
Dunkirk ; 58, between Long Island Cit}^ and Green- 
port, and 87, between Philadelphia and Bethlehem. 
This dispersion of mail traffic among numerous 
trains has been a marked feature of the development 
of the postal system. The following statement, in 
which all trains traversing less than the entire routes 
have been reduced to their equivalents in trains 
passing over their entire length, shows its progressive 
character : 



Between- 


Number of round 
trips per week. 




1875. 


1897. 


New York and Philadelphia 


74 
40 
20 


299 


Philadelphia and Pittsburg 

New York and Dunkirk 


88 
49 







Similar comparisons showing the expansion of the 
postal system from 1879 to 1897 are shown below : 



26 



THE POSTAL DEFICIT. 



NUMBER OF ROUND TRIPS PER WEEK. 



Between — 


1879, 1880, 
1881, or 

1882. 


1894, 1895, 

1896, or 

1897. 


Concord and White River Junction. . 
Boston and Albany. 


17.15 

45.11 

46.52 

6. 

107.48 
14. 

•14. 

2a04 
21.49 

6. 
14.3 

6. 
12. 
14. 
14. 

9.70 

6. 

9.68 
12. 
21.15 

6. 
16.02 
12. 
22.6 
15.29 

8.73 
12. 
14.4 
26. 

6. 

7. 
12. 

8.5 

7.09 

6. 

6. 


28.75 
90.17 


New York and Buffalo 

Canandaigua and Tonawanda. 

New York and Piiiladelphia 

Atlanta and West Point 


109.38 
11.84 

299.40 
21. 


Nashville and Hickman 


18.85 


Glasgow Junction and Glasgow 

Dayton and Toledo 


13. 
30.89 


Columbus and Pittsburg 


49.17 


Peoria and Rock Island 


12. 


Milwaukee and La Crosse 


31.23 


Mankato and Wells 


12. 


Hannibal and Sedalia 


14. 


Kansas Citv and Denver 


14.37 


Topeka and Kansas City 


34.46 


Union Pacific Transfer and Ogden. . . 

Salt Lake City and Stockton 

San Francisco and Ogden. 


28.46 

6. 
17.92 


Weverton and Hagerstown 


21. 


Grafton and Parkersburg 


27.73 


Columbia and Greenville 


9.44 


Cincinnati and Chattanooga 

Chicago and Milwaukee 


20.39 
46.02 


Chicago and Burlington 


50.12 


Chicago and Davenport. . 


38.30 


St. Paul and Missoula 


9.67 


Dubuque and Sioux Citv 


17.88 


St. Louis and Atchison. : . . 

St Louis and Kansas City 


28.97 
25.47 


Little Rock and Arkansas City 

Houston and Orange . 


9.65 
14. 


Omaha and Oreopolis Junction 

Valley and Stromsburg 


23.50 
11.67 


Columbus and Norfolk 

Marion and Ciiamberlain 


15.22 
12. 


Flandreau and Sioux Falls .... 


11.64 







THE POSTAL DEFICIT. 



27 



The railway mail routes connecting the points 
shown in the foregoing statement rendered services 
directly to 1,406 post-offices and points of exchange 
at the beginning of the period covered by the com- 
parison, and to 1,537, or a number greater by 9.3 
per cent, at its close. 

The increasing demand upon the railways of the 
country made by the Post-office Department is sum- 
marized, so far as this phase of development is con- 
cerned, in the following statement : 



Year. 


Total length 
of railway 
mail routes 
in miles. 


Total annual 
transportation 
in miles. 


No. of miles of 
annual trans- 
portation per 
mile of rail- 
way mail 
routes. 


1873 


68,457 
110,208 
166,952 
171,212 
173,475 
176,727 


65,621,445 
129,198,641 
252,750,574 
267,117,737 
273,190,356 
287,591,269 


1,034 
1,172 


1883 


1893 


1,514 


1895 


1,560 
1,574 


1 897 


1899 


1,627 





In the foregoing table the figures in the first col- 
umn show the total number of miles of railway uti- 
lized in the postal service, and those in the second 
show the total transportation as measured by num- 
ber of miles traversed by locomotives hauling some 
quantity, great or small, of mail. The third column 
shows the average number of times each mile of route 
was traversed by separate lots of mail. It appears 
that the entire transportation of 1873, as thus meas- 



28 THE POSTAL DEFICIT. 

ured, was equivalent to traversing the total route 
mileage of that year 1,034 times, while in 1899, with 
a railway route mileage 178 per cent greater than in 
1873, it was equivalent to traversing the total route 
mileage 1,627 times. 

The right claimed and exercised by the Post-office 
Department to send mail on any train which it may 
select also results in the gravitation of preponderat- 
ing portions of the mail toward the most rapid and 
consequently the most costly passenger trains. The 
addition of a postal car to a limited express is fre- 
quently a source of great difficulty to the operating 
departments, as every additional car is an obstacle 
to the observance of schedule time and imposes an 
additional and material demand upon motive power 
which can be met only by the considerable enhance- 
ment of train cost. Under these conditions the typical 
mail-carrying train unquestionably exceeds in speed 
the average speed established for passenger trains. 
How serious a matter the requirement to furnish 
mail facilities in connection with the fastest trains 
may become is indicated by one of the rules of the 
Department which requires : 

"At all points wliere the Department deems the exchange of 
mails necessary, the speed of trains must be slackened so as to 
permit the exchange to be made with safety." 

The increase in rapidity of mail movement during 
the last three decades is especially notable. In 1868 
the average running time of the mail train between 
New York and New Orleans was 98 hours and 39 
minutes ; in 1877 it was 8Q hours and 30 minutes ; 



THE POSTAL DEFICIT. 29 

in 1887, 51 hours; and in 1897, 39 hours and 10 
minutes for one train and 43 hours and 55 min- 
utes for another. In 1868 and 1877 there was but 
one train; in 1887, two; and in 1897, three. A 
few examples of increased speed of passenger trains 
may be added, with the observation tliat they indi- 
cate a minimum statement of the advancement in 
mail service. From 1873 to 1898 the average time 
of passenger trains between New York and St. Louis 
decreased from 50 to 30 hours, and that between New 
York and Chicago from 37 hours 41 minutes to 26 
hours. The average speed of passenger trains be- 
tween Chicago and Council Bluffs via the Chicago 
and Northv/estern railway was 22 miles per hour in 
1879 and 32 miles per hour in 1897. 

In a letter of instructions dated December 4, 1897, 
the Second Assistant Postmaster General expressed 
the principle which is the basis of the Department's 
demands concerning mail traffic in the following 
words : 

" The dispatch of mails is of such importance to the public 
that the Department holds that it should not be treated as of 
secondary importance to passenger or other traffic." 

The practical consequence of the vigorous asser- 
tion of this principle is that passenger, express, and 
all other business is treated as secondary in import- 
ance to mail. Not only does mail go forward on the 
fastest passenger trains, but if these are run hi sec- 
tions the mail must invariably go forward on the 
first section. In cases of accidents or delays from 
snow blockades, washouts, or other causes, if one or 



30 THE POSTAL DEFICIT. 

more trains are overtaken by a following train and 
are consolidated and run in sections all mail cars 
must be put in the first section, while the passengers 
are hauled in those that follow. In all cases of acci- 
dents it is usual to take care of the forwarding of the 
mail ahead of all other traffic. Even in the exigen- 
cies which occasionally grow out of unforeseen and 
unavoidable interruptions of business the postal cars 
or the compartments allotted to mail in baggage cars 
must not be utilized for baggage or express. On the 
other hand, it is required that if, for any reason, the 
space allotted to mail is insufficient the latter must 
be allowed to encroach ujDon the space usually occu- 
pied by baggage and express. The Department has 
frequently forced the railways to attach postal cars 
to trains supposed to be run exclusively for express 
business, while if the latter are delayed and get in 
the w^ay of mail trains they must be side-tracked to 
allow the mail to pass. As a further example, though 
possibly an unusual one, of the rigorous enforcement 
of the exclusiveness of the mail service, it may be 
mentioned that even the General Superintendent of 
the Chicago, Burlington and Quincy railroad cannot 
ride on the special fast mail run over that road with- 
out previously obtaining a permit from the officers 
of the Railway Mail Service. Train schedules are 
also frequently arranged in such a Avay, to accommo- 
date the mail, especially newspaper mail, that it is 
impossible for the trains to do a profitable passenger 
business. An obvious illustration is the train from 
Chicago to Cairo, Illinois, run over the Illinois Cen- 



THE POSTAL DEFICIT. 31 

tral railroad. This train leaves Chicago at 2.50 a. m., 
and carries the morning newspapers. It is estimated 
to cost the railroad eight-five cents per mile for 
operating expenses alone, and earns but sixty-one 
cents, of which the mail pays ten ; express, twenty- 
six cents, and passengers, twenty-five, making a net 
loss of twenty-four cents per mile run. 

In this connection a quotation from a letter written 
by the Postmaster General to the Chairman of the 
Committee on Post-offices and Post-roads of the 
House of Representatives, under date of March 29, 
1892, is instructive. He said, in part : 

" It is a fact that other than through willingness to co-operate 
on the part of the raih'oads, the Post-office Department possesses 
no authority in determining train schedules. . . . . 

*' . . . . It never seems to have been contemplated that 
the occasion would arise when the Department would want to 
fix its own raih'oad schedules, the natural expectation being 
that the mails would adapt themselves to ordinary schedules 
rather than that, to some extent, ordinary schedules should 
become secondary to the needs of the mail service. It quickly, 
however, became plain that the due frequency, the speed, and 
the extent of train service that prevailed from 1878 till 1880 
Avere greatly below the needs of the country ten years later, 
and I became impressed with the belief that it was never con- 
templated, even by those who were most enthusiastic in their 
advocacy of the expansion of the railway mail system, that its 
extent would in a few years reach the proportions that have 
prevailed since 1889. .... In 1878 there did not exist a 
single railroad-train schedule that the railroads felt obligated 
to maintain or modify primarily for the advancement of the 
mails. The Post-office Department, every one understood, was 
expected to make the best use it could of schedules created 
from the standpoint of the requirements of passenger and other 
traffic, and as these fluctuated so the mail service was expected 
to change Today the conditions are altogether dif- 
ferent, and there exists over practically the entire arterial rail- 
way post-office system of the country train schedules that 
have been fixed primarily to promote the mail service, and 
these, except the Post-office Department consent, will not be 
changed." 



32 THE POSTAL DEFICIT. 

The requireiiieiits that have been enumerated and 
others equally insisted upon by the Department are 
enforced by, among other means, a system of fines 
which is exceedingly drastic. The postal regula- 
tions on this subjetit are as follows : 

" Fines will be imposed unless satisfactory explanation be 
given in due time for an,v of the following delinquencies on the 
part of the railroad company : 

" First. Failing to take from or deliver at a post-office the mail 
or any part of it, or to deliver the njail into a post-office im- 
mediately upon arrival, where the service devolves upon the 
railroad company. 

" Second. Suffering the mail, or any part of it, to become wet, 
lost, injured, or destroyed, or conveying it in a place or man- 
ner that exposes it to depredation, loss, or injury. 

"Third. Refusing, after demand, to carry mail by any train. 

" Fourth. Leaving or putting aside mail, or any part of it, to 
the accommodation of passengers, baggage, express, freight, or 
other matter. 

" Fifth. Leaving mail which arrives at the station before the 
departure of the train for which it is intended. 

" Sixth. Failing to use the first practicable means of forward- 
ing mail which is delayed en route. 

" The fine will be in each case such sum as the Postmaster 
General mav impose, in view of the gravity of the delinquency, 
and will be deducted from the compensation of the railroad 
company." 

In accordance with the foregoing fines aggregating 
$100,046.90 were assessed against the mail-carrying 
railways during the fiscal year ended June 30, 1899. 
Of this amount $3,118.58 was remitted after satis- 
factory explanation, leaving a net deduction from 
railway mail pay on account of fines of $96,928.32. 

POSTAL AXD COMPARTMENT CAR SERVICE. 

As has been indicated, much the greater portion of 
the aggregate weight of mail is carried, subject to dis- 



THK POSTAL DEFICIT. 



33 



tribiition while in transit, in full postal and com- 
partment cars. These differ merely in the quantity 
of space which they afford and in that, while the full 
car is run exclusively for mail, the compartment con- 
sists of space separated by a partition from the bal- 
ance of the baggage car. The space so separated is, 
however, devoted exclusively to the mail service, and 
the distinction last mentioned is frequently more 
superficial than real, for it often happens that the 
demand of the Post-office Department for a compart- 
ment requires the railway on which the demand is 
made to attach an additional car to the train affected. 
In this case it may not have any use for the portion 
of the car which is not devoted to mail. 

The following statement shows the number of cars 
of each kind in use and in reserve during each alter- 
nate year from 1882 to 1898 and in 1899 : 



Full postal cars. 


Compartment cars. ' 


Year. 


In use. 


In reserve. 


In use. 


In reserve. 


Total. 


1882 


318 


24 


1,229 


233 


1,804 


1884 


349 


102 


1,219 


340 


2,010 


1886 


350 


85 


1,362 


407 


2,204 


1888 


366 


91 


1,616 


416 


2,489 


1890 


439 


103 


1,760 


475 


2,777 


1892 


500 


139 


1,867 


506 


3,0L2 


1894 


550 


175 


1,911 


526 


3,162 


1896 


622 


154 


1,996 


546 


- 3,318 


1898 


701 


180 


2,082 


553 


3,516 


1899 


729 


192 


2,046 


539 


3,506 



34 



THE POSTAL DEFICIT. ^ 



Data shovring the number of cars in use prior to 
1882 are not at hand, but the following statement 
showing the number of routes over which postal cars 
were run in the years named and the number of 
miles included indicates the growth of this service. 
The data refer to full postal cars only and do not in- 
clude compartment-car service. 



ROUTES OVER WHICH FULL POSTAL CARS WERE KUX. 



Year. 


Number. 


Length in 
miles. 


Percentage of 
total length 
of postal 
routes. 


1873 


59 
153 
216 
237 
228 
223 
238 


14,866 
25,571 
35,153 
37,693 
39,494 
40,463 
43,178 


23.43 


1883 


23 20 


1893 


21.06 


1896 

1897 


21.81 
22.77 


1898 

1899 


23.15 
24.43 



The growth of this service, including compart- 
ment as well as full postal cars, is in some degree 
indicated by the number of traveling postal clerks 
employed. Such data are shown below : 



Year. 


Number of 
postal clerks. 


Year. 


Number of 
postal clerks. 


1875 


2,238 
2,946 

4,387 


1890 


5,836 


1880 


1895 


7,045 


1885 


1899 


8,388 . 







THE POSTAL DEFICIT. 35 

The number of pieces of mail handled increased from 
1888 to 1899 from 6,528,772,060 to 13,351,992,725, 
and the number of miles traveled per annum by 
cars in which mail was distributed increased from 
52,419,773 in 1879 to 183,585,612 in 1898. This 
mileage was 56.31 per cent of the total number of 
miles traveled by cars containing mail in the former 
and 65.15 per cent, in the latter year. 

Mr. Loud, the experienced chairman of the Com- 
mittee on Post-offices and Post-roads of the House of 
Representatives and an unquestioned authority on 
postal progress, has summarized these facts in the 
statement that " the tendency every year is to secure 
greater space or less weight for mail because greater 
distribution is being demanded every year." As 
early as 1892 the Postmaster General in a signed 
statement declared : 

" The enormous development of mail distribution in railway 
post-offices, which, as the name implies, are fully equipped 
traveling post-offices taking on and putting out mail every few 
miles both night and day, has been the product of hearty co- 
operation between the Post-office Department and the princi- 
pal railways of the country, and . . . the facilities required 
now are many times greater than they were at the time the 
present rates were fixed, and it is believed the calls the Depart- 
ment makes upon the railroads now are in excess of anything 
it was expected the service would need. . . . Fifteen 
years ago the largest share of the mail service of the country 
was by means of closed or direct pouchings, and when railway 
post-offices were run it was exceptional to have them oftener 
than once daily in each direction. There was a time when 
the position was taken by many railroads and partially con- 
ceded by the Department that notwithstanding they were 
obligated to carry the mails upon all trains, the obligation did 
not extend to the providing of an unlimited extent of apart- 
ment space or more frequently than six times a week ; but 
this claim has been virtually abandoned, there being but a few 
instances in which the railroads are not willing to grant such a 
degree of post-office space as the Department decides is neces- 
sary. 



36 THE POSTAL DEFICIT. 

" Today the railway post-office system is general, and instead 
of once daily many of the lines are double daily ; and it is only 
for lack of appropriation that we are prevented from applying 
double daily railway post-office service to practically all the 
railroad lines on which the railway post-office operates. In 
connection with lar^e cities the railway post-office on some 
lines runs as frequently as three, four, or five times daily. 
Each service of this kind is attended with considerable direct 
expenditure by the railroad. Every railway mail service re- 
quires at least an apartnoent of a car, for which there is no 
special compensation, and, as the frequency of this service is 
not necessarily occasioned by an immediate marked growth in 
the weight of the mails, the railroads are deserving of a good 
measure of praise for the promptness with which they incur 
the increased cost, sometimes imposed upon them by the De- 
partment in its eagerness to render the mail service more and 
more complete. The Department, in its efforts to remler the 
mail service more perfect, frequently proceeds on its own lines, 
not deeming it essential to give special consideration to the 
outlays to be incurred by the railroads." 

The law under which the mails are carried by the 
railways enumerates, among the conditions which 
must be met by the carriers, "that sufficient' and 
suitable room, fixtures, and furniture, in a car or 
apartment properly lighted and w^armed, shall be 
provided for route agents to accompany and distrib- 
ute the mails." The postal regulations are still more 
explicit, but must be regarded as merely a more de- 
tailed statement of the legal requirements, and are 
so accepted by the railway companies. The follow- 
ing quotation is from the postal regulations : 

"That all cars or parts of cars used for the railway mail 
service shall be of such style, length and character, and fur- 
nished in such manner, as shall be required by the Postmaster 
General, and shall be constructed, fitted up, maintained, heated, 
and lighted by and at the expense of the railroad companies." 

As a consequence of the application of the rules 
that have been quoted, postal and compartment cars 
are invariably built, equipped, ^ and maintained 



THE POSTAL DEFICIT. 37 

under conditions which amount, substantially, to 

complete control, even of the most minute details, on 

the part of the Department. The feeling on the part 

of railway officers in regard to this matter is well 

represented by a quotation from the testimony of Mr. 

Kruttschnitt, vice-president and general manager of 

the Southern Pacific railroad, before the Joint Postal 

Commission. He said : 

" Not over two months ago the question was taken up with 
us by the Department of providing some new postal cars. To 
avoid misunderstanding, I requested the railway mail superin- 
tendent to take the question up direct with our superintendent 
of motive power. I said : ' You show us exactly in drawings 
what the Department wishes. We don't want any hereafter 
about it or complaints that the car is not just as you want it. 
Now, make your own plans.' I gave him free entry to our 
drafting-rooms and shops, and in conference with the superin- 
tendent of motive power the plan for the new cars was made." 

Postal cars are built more substantiall}^ than any 
others in railway service, except parlor and sleeping 
cars, and are in every respect equal to the latter. 
Though there are doubtless some lighter cars of old 
construction still in use, the standard postal car now 
weighs from 80,000 to 100,000 pounds. The follow- 
ing comparative weights relate to the newer equip- 
ment of the Atchison, Topeka and Santa Fe railroad, 
and may be regarded as typical of recent construction 
at least in the region traversed by that road : 

WEIGHT OF EQUIPMENT. 

Postal car 94,300 pounds. 

Express car 63,700 " 

Baggage car 65,400 " 

Passenger coach 65,300 " 

Chair car 67,600 *' 

Tourist sleeper 100,000 " 

Pullman sleeper ] 20,000 " 



38 THE POSTAL DEFICIT. 

The postal laws declare that the cars or compart- 
ments devoted to mail distribution shall be properly 
lighted and warmed, as well as supplied with suitable 
fixtures and furniture. Under this law the railway 
companies are compelled to supply the cars with pat- 
ent devices for handling, loading, and unloading 
mail sacks; with patent devices for catching the mail, 
and with nettings over the windows to keep cinders 
out of the cars. These cinder devices cost twelve 
dollars per car. In a car having a floor space of nine 
by sixty feet, the Southern Pacific Company Avas re- 
cently compelled to place nine chandeliers of four 
lights each, or a total of thirty-six Pintsch gas lights, 
to provide for a total area of only 540 square feet. 
The general superintendent of the New York Central 
and Hudson River railroad testified that it cost an 
average of 17f cents per hour to light mail cars, as 
against an average of eiglit cents per hour for passen- 
ger coaches. The exj^enditures for heating and 
lighting postal cars are greatly enhanced by the fact 
that these cars have frequently to be placed at the 
disposal of the postal employes many hours before 
the starting time of the trains to which they are to be 
attached. In one case reported by the Illinois Cen- 
tral railroad, the postal cars are occupied by the 
postal clerks and must be fully heated and lighted 
for full six hours and fifty minutes before leaving the 
terminal. 

The ordinary fixtures in a sixty-foot postal car 
weigh about 4,350 pounds, and those in a twenty-two 
foot compartment about 1,230 pounds. These fix- 



THE POSTAL DEFICIT. 39 

tiires occupy about two-thirds of the space in each 
car, and their Aveight slightly exceeds that, at least 
for full cars, of the mail that is carried. The addi- 
tional furniture, supplied by and at the expense of 
the railway, consists of chairs, feather dusters, clothes- 
presses, and similar conveniences. The cost of postal 
cars was variably stated by different witnesses before 
the Joint Postal Commission at from about $3,000 on 
the Flint and Pere Marquette railroad, which has 
but one, to $6,000 on the Illinois Central railroad. 
There can be very few, if any, which have been con- 
structed at the lower figure, and those must be of the 
older type. Mr. Kenna, vice-president of the Atchi- 
son, Topeka and Santa Fe railroad, which builds its 
own cars, testified that the cost charged on the books 
of the company for the last one constructed was 
$4,584, while Mr. Erastus Young, general auditor of 
the Union Pacific system, declared that his company 
operated twenty-five full postal cars with a floor ca- 
pacity of 12,734 feet, which had cost, in the aggre- 
gate, $129,588, or an average per car of $5,184. 
Probably the witness best able to speak on this sub- 
ject with general authority was Mr. Wickes, vice- 
president of the Pullman Company, who testified 
that his concern had recently built some sixty-foot 
postal cars at costs ranging from $5,400 to $5,900, 
and some fifty-foot postal cars at $5,200. He stated 
that sixty -foot baggage cars built by his company 
cost from $3,800 to $4,200. The same authority de- 
clared that the annual cost of maintaining a sixty- 
foot postal car would be about $1,000, adding that a 



40 THE POSTAL DEFICIT. 

large part of the cost of car maintenance consists of 
keeping running gear in order, and that the latter is 
as costly for a postal car as for a Pullman sleeper. 

Two mail-catchers constitute a necessary part of 
the equipment of each postal car, under modern 
methods, and must have their complementary mail 
cranes at the points where they are to act. Mail 
cranes are more numerous than mail-catchers, the 
proportion on the line of the Chicago and North- 
western railway, for example, being 262 of the for- 
mer to 150 of the latter. The cost of mail cranes on 
the Union Pacific system was about $18.57 each, and 
that of catchers, $7.50 each. The expense of main- 
taining and repairing catchers alone from July to 
November, 1898, was at the rate of $16.00 per an- 
num. 

TRAVELING POST-OFFICES. 

The postal car and the compartment car have 
superseded the distributing offices which were, at 
one time, a prominent feature of American postal 
practice. An order of April 30, 1859, discontinu- 
ing 13 of the 150 distributing offices which were 
then in existence, is regarded by the author of the 
" History of the Railway Mail Service," which w^as 
published in 1885, as marking the beginning of the 
new system. The following is quoted from that 
history : 

" The discontinuance of distributing offices was coincident 
with the establishment of railway post-offices. Instead of send- 
ing mail to be delayed from ten to twenty-four hours at points 
on the way, the practice of direct mailing was substituted, and 



THE POSTAL DEFICIT. 41 

the abuses which had crept into the service through the dis- 
tributing post-offices were in part corrected. The high com- 
missions which were allowed formerly were cut oflf. The 
order of April 30, 1859, therefore, marks an epoch in the his- 
tory of the postal service of the country, in that it was an im- 
portant economical measure, not only removing a heavy bur- 
den from the revenues of the Department, but greatly accel- 
erating the mails, preparing the way for the improvements in- 
troduced by the changed condition of transportation." 

Superintendent Bradley is authority for the state- 
ment that, at the present time, mail for every State 
and Territory in the Union, with the exception of 
Arizona, Nevada, New Mexico, North Dakota, and 
Utah, is separately handled and sorted, piece by 
piece, on the postal cars between New York and Chi- 
cago and Saint Louis. On the basis of weight, ninety 
per cent, of the mail between these points is assorted 
on the trains and only ten per cent, goes through 
intact. In December, 1898, a calculation concerning 
the westward-bound mail out of New York was made 
for the purpose of determining whether a sufficient 
amount of through mail could be segregated to war- 
rant the Department in asking for competitive bids. 
The result of this effort was the discovery that the 
average daily weight of all made-up mails, not re- 
quiring distribution in transit, was only fifteen thou- 
sand pounds, and that even this cj^uantity was pro- 
vided for by six or eight separate dispatches. To 
secure the absolutely free transportation of this rela- 
tively unimportant quantity would have had an al- 
most inappreciable effect upon the total payment, 
but the delay incident to its consolidation into a 
single shipment would doubtless have been produc- 
4 



42 _ THE POSI'AL DEFICIT. 

tive of serious inconvenience and the cause of imme- 
diate complaint. 

The development of the railwa}^ post-office since 
its inception has been progressive and rapid. Not 
only is mail distributed with regard to the city or 
town to which it is destined, but it is frequently pre- 
pared for immediate distribution to separate sub- 
stations and to individual mail-carriers in the free- 
delivery cities. The great mail trains which reach 
the city of Chicago every morning carry the mail 
into that city in such condition that that portion 
which goes to the business section is actually ready 
for the carriers, while the balance is sorted and ar- 
ranged to go to the respective stations serving the 
urban and suburban residence regions. For this 
purpose the Chicago mail must be arranged in about 
175 lots, which means that there must be space in the 
postal cars to hang 175 open pouches. With regard 
to the outgoing mail from a city like Chicago, it is 
evident that with the increase in the number of post- 
offices in the country from 33,244, in 1873, to 75,000, 
in 1.899, the distribution of mail in the office in- 
stead of in the cars would not only result in serious 
delays, but also in tlie addition of enormous weights 
of pouches to the total weight carried by the rail- 
ways. Similar results w^ould occur in about the 
same proportion to the total volume of outgoing 
mail at nearly every post-office. In the words of a 
witness before the Joint Postal Commission, " there 
would be a great deal more leather than mail." 

Even as earlv as 1874 Mr. Bangs, the General Su- 



THE POSTAL DEFICIT. 48 

perintendent of the Railway Mail Service, and the 
man to whom, above all others, is due the credit for 
the present perfection of this branch of the postal 
service, said that — 

"The effect of the trunk lines suspending the running of 
postal cars would be to force the Government in the cit)'- of 
New York to hire three or four large warehouses to do the mail 
distribution that thej^ now do upon the railway trains." 

At about the same time Mr. Davis, the Assistant 
Superintendent, testified that the effect of the discon- 
tinuance of postal cars w^ould be — 

"To throw into the principal post-offices such a mass of 
matter that they would have no accommodations for it. With 
the limited accommodations they have they could not work a 
force sufficient to distribute in good time. It would involve a 
very annoying delay." 

When the railways protested against the payment 
provided in the law of 1873, and the postal authori- 
ties feared that they would be compelled by Con- 
gressional parsimony to return to the antiquated 
system, the postmaster of the city of New York went 
before the House Post-office Committee, which was 
considering the question, and stated that to go back 
to the former mode of distributing mails and making 
up pouches in the post-offices only would necessitate 
a building in the city of New York that would cover 
all the ground from the city hall to the Battery, util- 
izing all the space that could be had if the building 
was six stories high, and even then the delay of the 
mail passing through, as well as that originating and 
ending in New York city, would be many hours. 

Coming to a more recent period, the present utili- 



44 THE POSTAL DEFICIT. 

zation of the traveling post-offices can be set forth in 
a few pertinent quotations from officers of tlie Post- 
office Department. In 1896 the Second Assistant 
Postmaster General said : 

" Marked as is the improvement in the rapid transit of mails, 
effected through the combined efforts of the Department and 
the carriers, perhaps the most noteworthy feature is the extent 
to which the distribution in the railway post-offices is now car- 
ried. No longer content with delivering into the larger post- 
offices the mail addressed thereto, the railway post-office now 
separates and arranges for immediate delivery by the letter- 
can-iers in larger cities an immense and constantly increasing 
volume of mail to the extent of making it almost possible to 
supply the letter-carriers from the postal car on its arrival with 
the mail intended for their personal distribution, which prac- 
tically eliminates a very large amount of work that was for- 
merlv done in tiie post-office buildings. 

" More and more of the work formerly performed in the city 
post-offices is thus transferred to the railway post-offices, the 
effect of which should be kept well in view when considering 
the necessit}^ for increasing appropriations for this branch of 
the service, the idea being that expenditures of this nature will 
not only increase the efficiency of the mail service, but will 
greatly decrease the amount required for increasing Govern- 
ment buildings intended for post-office purposes " 

Xor is it proposed that the development of the rail- 
way mail service shall cease with w^hat has been ac- 
complished. The officers of the Department are 
looking forward to still greater achieveihents in the 
service of the public. The direction these improve- 
ments will take is already clearly indicated, and it 
is evident that they wdll impose upon the railways 
relatively greater demands for facilities and space. 
The following is from the annual report of the Post- 
office Department for the year 1895 : 

"It is the intention eventually to absorb all the work of city 
distribution into the railway mail service whenever the mails 
can be expedited thereby." 



THE POSTAL DEFICIT. 45 

III 1899, the present Second Assistant Postmaster 
General said : 

" Some day, if I live long enough, I hope to show you how 
the car and wagon will dispense with the big city post-offices. 
The postmaster at New York said to me a few days ago that if 
we were not doing what we are doing on wheels he could not 
handle his mail in New York." 

It follows as a not unnatural consequence of the 
extent in which the work of separating and distribut- 
ing the mails has been transferred from the post- 
office proper to the cars supplied by railway carriers ; 
that the time occupied in running over the railway 
mail routes traversed by single crews of postal clerks 
is inadequate for the accomplishment of the labors 
assigned to them. Two remedies for this condition 
are equally obvious, but only one of them is really 
available to the Department. More men could be 
put on the cars and greater space supplied for the 
work of distribution in transit, but the Department 
needs all of the money it can secure for additional 
and improved service, and therefore this remedy, 
though conceivable, is not actually practicable. The 
other remedy is to secure the use of the cars during- 
a longer period, which means that they must be 
available for use for whatever period is necessary 
before they start. This practice has become quite 
common, and, as will be evident, imposes upon the 
railw^ays the necessity of providing more equipment 
than would otherwise be required. For example, 
the fast mail for the South leaves Chicago at 2.50 in 
the morning, but the cars must be placed in position 
and be ready for the postal clerks to commence the 



46 THE POSTAL DEFICIT. 

distribution of mail at eight ox-lock of the previous 
evening. The corresponding train from the South 
arrives in Chicago at midnight, and there would be 
no difficulty in sending the same postal cars back 
three hours later if this equipment was not recjuired 
for use in the station before leaving. Similar use of 
postal cars is made at the termini of nearly every 
route, and in at least one case the cars are made 
ready full twelve hours before leaving time. The 
space required at important terminals for this pur- 
pose is a by no means negligible item. 

The average quantity of mail that is carried in a 
full postal car unquestionably approximates two tons, 
though at least one competent and experienced divis- 
ion superintendent of the Railway Mail Service thinks 
that it does not exceed 3,500 pounds. There is some 
doubt concerning the limits within which the items 
that make up the aggregate from which this average 
is obtained range, but there is evidence that the 
average of a particular route, on the Great Northern 
railway, is as low as 1,700 pounds, and that one train 
of three cars on the Chicago, Burlington and Quincy 
carries but 3,945 pounds, or less than seven-tenths of a 
ton per car. On the other hand, there are routes on 
which the average runs as high as three, and in 
one case at least to 3.87, tons (including mail in 
storage cars) per postal car, the former being on the 
Pennsylvania railroad and the latter on the Chicago, 
Burlington and Quincy railroad. The fact that cars 
ranging from forty to sixty feet in length and weigh- 
ing from 80,000 to 100,000 pounds never— at least, 



THE POSTAL DEFICIT. 47 

only in vary rare instances — carry a paying load of 
as much as four tons, and that the average is as low 
as two tons, would require an elaborate explanation 
had it not already been made clear that the mail- 
carrying capacity of postal and compartment cars 
has been made subservient to the requirement that 
these cars shall contain complete facilities for mail 
distribution and ample room for the accommoda- 
tion of the employes who must perform the work. 
These requirements prevent anything like loading 
to the full capacity of the cars as mere carriers of 
bulk or w^eight. Mr. Troy, Superintendent of the 
Sixth Division of the Railway Mail Service, who has 
had experience as a traveling postal clerk, declares 
that it requires two clerks to work 3,500 pounds of 
mail in a car ; that four tons of mail would crowd a 
letter car, and that an ordinary force would find it 
impossible to work in a car containing six tons of 
mail. As the maximum must always materially 
exceed the average, not only on account of the im- 
possibility of planning so as to secure an absolute 
balance between facilities and traffic, but also for 
what is probably in this case the more potent 
reason, that the weight of mail in a postal car in- 
variably diminishes as its journey progresses, it is 
perfectly evident that the averages g iven are not un- 
reasonably low. The fluctuation in volume of mail, 
which Superintendent Bradle}" says amounts, in the 
mail dispatched from New York city, to a variation 
of sixty per cent, from day to day, also serves to 
diminish the average, because facilities must always 



48 THK POSTAL DEFICIT. 

be ample for the heaviest mail that may be dis- 
patched at any time. 

If anything further were required to establish the 
fact that, as Professor H. C. Adams has declared, "the 
character of the service rendered by postal cars is es- 
sentially different from the service of transporting 
mail," it ought to be found in the following quotation 
from a letter written by the Second Assistant Post- 
master General during Februarv, 1897 : 

"On the Pennsylvania railroad, in a special train of six cars 
entirely for Department use, four of them are }wstal cars, paid 
for by the Department, and the other two are storage cars which 
are not paid for. The total weight of mail carried in the six 
cars is 70,513 pounds, or 35 tons, a load which could easily he 
carried in tiie storage cars without the expense of the postal 
cars if the Government does not care to do post-office work en 
route. In the case of trains with only one postal car, the mail 
so hauled, were it not for the Government necessities of work- 
ing in transit, would find a place in the ordinary baggage car 
without the expense to the railroad of hauling the postal car. 
1 think this will illustrate to you that the railroads really 
have no use for the postal car that we require them to furnish, 
equipped in such manner that they cannot possibly be used for 
any other purpose." 

It would be a great mistake to assume that the ob- 
servation that there is an essential difference between 
a simple transportation service and that rendered 
by postal cars is properh^ applicable to the postal 
car onl^^ The compartment car is a diminutive 
postal car, and differs from the latter merely in size 
and in the legal status assigned to it by Congress, 
which denies a similar standing with the full postal 
car in regard to compensation. Only eighteen inches 
of the entire length of a twelve-foot compartment are 
available for storing mail, and in a thirty-foot com- 



THE POSTAL DEFICIT. 49 

partineiit, the largest in use, but eight feet and four 
and one-half inches are available for that purpose. In 
fact, when the extraordinary services performed in 
connection with all mail, including that carried in 
closed pouches, are considered, there is no justification 
left for the contention that railway mail services are 
merely those of moving a certain weight or bulk of 
mail, and as such are comparable with ordinary trans- 
portation services. 

MESSENGER SERVICE. 

The performance of what is known as messenger 
service by the railways which carry mail is a curious 
example of the survival of a practice long after the 
circumstances out of which it arose have ceased to 
exist. 

In the days when the mails were carried in stage 
coaches it was a comparativel}^ simple expedient to 
require the vehicles to turn aside from their regular 
routes and proceed moderate distances from the direct 
roads in order to save the Department the expense and 
difficulty of providing messengers and means of con- 
veyance between the routes and the post-offices located 
short distances therefrom. It is not probable that 
the number of these divergences was ever very great 
under the turnpike and stage-coach system, and the 
extreme distance which the latter should be required 
to go oat of its way in any case was fixed at eighty 
rods or one-quarter of a mile. This requirement 
was not abandoned when the greater portion of mail 
transportation was transferred to the railways, and 



50 THE POSTAL DEFICIT. 

the latter are still required to provide means for the 
transfer of mail between their stations and all post- 
offices located not more than one-quarter of a mile 
therefrom. Like everything else that the railways 
do for the Department, this service is performed 
under conditions laid down and rigidly enforced by 
the officers of the postal service. The following ex- 
tract from section 713 of the Postal Laws and Regu- 
lations is illustrative of this fact : 

"At places where the railroad companies are required to take 
the mails from and deliver them into post-offices or postal sta- 
tions, the persons employed by the railroad companies to per- 
form such service are agents of the companies and not employes 
of the postal service, and need not be sworn as employes of 
such service ; but must be more than 16 years old and of suit- 
able intelligence and character. Postmasters will promptly 
report to the proper division superintendent of the Railway 
Mail Service, or the General Superintendent thereof, any viola- 
tion of this requirement." 

General Shallanberger states that the railways are 
compelled under this system to furnish messenger 
service at ^,000 stations, or else to see that the post- 
master himself handles the mail, and that this leaves 
but 7,000 stations, distant more than eighty rods, at 
which the service is performed by agencies provided 
by the Department. This requirement extends to 
the transfer of mails between different railway lines 
when the stations are not more than eighty rods 
apart. 

The number of stations and the number at which 
the railways and the Government respectively fur- 
nish messenger service is given below for a few im- 
portant roads : 



THE POSTAL DEFICIT. 



51 





Number of stations. 


Railway. 

• 


Total. 


Messenger service 
performed by- 




Railway. 


Govern- 
ment. 


Pennsylvania railroad 

Louisville and Nashville railroad. . 

Southern Pacific Company 

Chicago and Northwestern rail- 
way 


1,454 
674 
, 700* 

761 
122 


785 
445 
419 

570 

88 


669 
229 
281* 

191 


Mobile and Ohio railway 


34 






Total 


3,711 


2,307 


1,404 







* Approximate. 



From the foregoing it appears that the roads 
named perform messenger service at 62 per cent of 
the stations that they serve. They are, as a whole, 
scarcely typical of the country at large in this re- 
spect, because in the aggregate they probably serve 
a larger proportion of the older and larger cities a.nd 
other settlements, in which the post-offices and busi- 
ness portions are more apt to be widely separated 
from the railway stations than in newer and less ex- 
tensive settlements. 

The expenses incurred in performing these serv- 
ices cannot be mathematically determined in many 
cases because they are covered by the compensation 
paid to employes who also have other duties. Such 
compensation must, however, be enhanced on account 



52 THE POSTAL DEFICIT. 

of this work. In a relatively small number of in- 
stances the railway companies are forced to hire em- 
ployes to perform these messenger services who have 
no other duties, or to contract with outsiders for their 
performance. 

The annual expenditures of the Illinois Central 
railroad, in accordance with such contracts, which 
provide for services at thirty-eight towns, aggregate, 
annually, $3,864. The Southern Pacific Company 
expends directly for this purpose $9,814.64 per 
annum, and estimates that the services of its em- 
ployes in this connection cost $57,115. This is 
for services at 419 stations, including 72 terminals. 
The expense incurred b}^ the Union Pacific sys- 
tem for transfers at Union Pacific Junction, Chey- 
enne, and Ogden amounts to $12,600, and that of 
the depot company at Kansas City to $8,500 per 
annum. There are some very curious results of this 
system taken in connection with the method of deter- 
mining railway compensation. A mail route on the 
Delaware, Lackawanna and Western railroad from 
Newark to Montclair, New Jersey, is 6.08 miles long, 
and the pay from the Department amounts to 
$587.44 yearly. Yet the railway company, in addi- 
tion to carrying the mail each way several times per 
day, actually expends $600 per annum for messenger 
service, $300 at each terminus. Two station agents 
along the line also perform messenger service, though 
without special compensation therefor. In another 
case, in which the route was finally discontinued at 
the request of the carrier which was unwilling to 



THE POSTAL DEFICIT. 53 

continue business on such terms, the railway ex- 
pended $480 for messenger service at a single station, 
while receiving but $45.48 per annum for the entire 
route. This route was from Clifton to Rosebank, on 
Staten Island, and the excessive expenditure was at 
the last-named point. 

Superintendent Bradley estimates, roughly, that 
the cost to the Department, if it undertook these 
services, would be $500,000 per annum, though Gen- 
eral Shallenberger testifies that it now costs the De- 
partment about $1,000,000 annually to handle mail 
at 7,000 or one-third as many stations as those in 
question. The offices served by the Department 
are, however, more than 80 rods from the railway 
stations. 

AVhen mail w^as carried principally in stage- 
coaches, the latter were required to prolong their 
journeys to the post-offices at terminals without re- 
gard to the distance which might separate them 
from the ordinary stopping places for passengers. 
This custom, too, has survived the conditions out of 
which it grew, and railways are now compelled to 
perform with difficulty and at considerable expense 
an extra service which was simply and easily per- 
formed by the stage-coaches. The following is from 
the Postal Laws and Regulations : 

" Every railroad company is required to take the mails from 
and deliver them into all terminal post-offices, whatever may 
be the distance between the station and post-office, except in 
cities where other provision for such service is made by the 
Department." 



-54 THE POSTAL DEFICIT. 

There is one difference between the service at 
terminals and that at intermediate points, viz., that 
the distance between the station and the post-office 
is added to the length of the route when this service 
is performed and the carrier receives pay at the 
regular rate per mile, while in the case of inter- 
mediate stations there is no compensation whatever. 
This service at terminals is, however, a cause of con- 
siderable loss to the railways which are forced to 
perform it, and the regulation is a source of relative 
injustice as between these companies and those at 
whose terminals the Department provides its own 
service. At Denver the Union Pacific railway ex- 
pends SI, 920 per annum to carry mails between its 
station and the post-office, while the amount added 
to its compensation in return is $215.70. A few 
years ago, before certain mails were diverted to other 
routes, the loss was considerably greater, the com- 
pany expending 83,900 and receiving but $410 per 
annum. 

SPECIAL STATION SERVICES. 

Allusion has already been made to the fact that 
track room must be supplied at terminal stations 
for postal cars during the hours that they are used 
for distributing purposes prior to the departure of 
the trains to which they are to be attached. This is 
not, however, the sole demand which the postal serv- 
ice makes in regard to station facilities. The postal 
regulations include the following : 



THE POSTAL DEFICIT. 55 

" The railroad company, at stations where transfer clerks are 
employed, will provide suitable and sufficient rooms for hand- 
lino; and storing the mails, and without specific charo:e there- 
for. Tliese rooms will be lighted, heated, furnished, supplied 
with ice water, and kept in order by the railroad company." 

Another section reads : 

" When a train departs from a railroad station in the night- 
time, later than 9 o'clock, and it is deemed necessary to have 
the mail dispatched by such train, the division superintendent 
may authorize the mail messenger or carrier to take the mail 
to the railroad station' at such time as will best serve the in- 
terests of the mail service, and deliver it to the agent or other 
representative of the railroad company, who will be required 
to keep it in some secure place until the train arrives, and then 
see that it is properly dispatched." 

Under these regulations the Chicago, Milwaukee, 
and Saint Paul railway furnishes the Department 
with a separate room at Saint Paul, which is thirty- 
seven by forty feet in size ; two at Chicago, twenty 
by twenty-five and eight by ten, respectively ; one 
at Minneapolis, twenty-five by twenty -four ; and one 
at Milwaukee, twelve by eighteen. At other points 
the mail is stored in the baggage-room, freight-room, 
or in the ofiice. Railway employes load the mail, 
and, in case there is no postal clerk on the train, they 
also unload it. At terminals they must unload it 
and take it in trucks or otherwise to the wagons or 
transfer it from car to car, as may be necessary. The 
Chicago and Northwestern railway employs eight 
men at Chicago who devote all their time to sorting, 
loading, and transferring mail. 



56 TUB POSTAL DEFICIT. 



RECORDS AND REPORTS REQL'IRED. 

Section 728 of the Postal Laws and Regulations 
reads as follows : 

" Railway companies shall keep a record of all closed pouches 
handled by their employes, and any irregularity will be imme- 
diately reported to the division superintendent of Railway Mail 
Service. Specific instructions in regard to the character of the 
record to be kept, and of the report to be made, will be issued 
through the office of the General Superintendent of Railway 
Mail Service." 

The stationer}^ and blanks necessary to carry out 
the foregoing section must be supplied to the rail- 
ways. Railways are also required to furnish the 
blanks, stationery, etc., required for use in connec- 
tion with the weighings which constitute the basis 
on which railway mail pay is calculated. 



FREE TRANSPORTATION OF PERSONS AND PROPERTY. 

The railways are also required to furnish services 
in the transportation of mail equipment and other 
postal property not in connection with any regular 
mail service for which they receive compensation. 
This, though by no means voluntary on their part,, 
must be deemed free service, as it has no fixed rela- 
tion, either in quantity or otherwise, to the services 
for which they are paid, and is in no way repre- 
sented in the calculations by which such compensa- 
tion is determined. This requirement is set forth in 
section 712 of the Regulations, which reads as fol- 
lows : 



THE POSTAL DEFICIT. 5.7 

" Railroad companies are required to convey upon any train, 
without specific charge therefor, all mail bags, post-office 
blanks, stationery, suppUes, and all duly accredited agents of 
the Department and post-office inspectors upon the exhibition 
of their credentials." 

The transportation of the clerks who are employed 
in handling mail in postal cars has been discussed 
under this head, but it by no means includes all of 
the transportation of persons which is furnished at 
the demand of the Post-office Department. The 
aggregate distance traveled by officers and employes 
of the Railway Mail Service during the year ended 
June 30, 1898, was, approximately, 356,452,635 miles, 
of which 337,217,407, or 94.60 per cent, was by postal 
clerks in the performance of their duties ; the bal- 
ance, equal to 19,235,228 miles, or 5.40 per cent, of 
the total, was made up of 17,608,450 miles traveled 
by clerks who were " dead-heading " and of the mile- 
age of the higher officers of the service. 

Post-office inspectors carry photographic commis- 
sions, in accordance with the terms of which the rail- 
ways are obliged to carry them free. These commis- 
sions read in part as follows : 

" To whom it is concerned : 

"The bearer hereof is hereby designated a post-office in- 
spector of this Department, and travels by my directions on 
this business. He will be obeyed and respected accordingly by 
mail contractors, postmasters, and all others connected witli the 
postal service. Railroads, steamboats, and other mail contract- 
ors are required to extend the facilities of free travel to the 
holder of this commission." 

The miles traveled by inspectors during Septem- 
ber, 1898, numbered 247,513, which was at the rate of 



58 THE POSTAL DEFICIT. 

2,970,156 miles per year. The superintendent of the 
free-delivery s^^stem estimates that the holders of 
commissions calling for free transportation in his 
branch of the service average 25,550 miles per annum. 
As there are twenty persons who hold such commis- 
sions, the total travel must approximate 511,000 
miles. Congress has given at least tacit sanction to 
the understanding that the railways must furnish 
free transportation to the employes of the Department 
whenever traveling on other than official business. 
This apparent sanction is to be found in the provis- 
ion which required the Department to revoke the 
order which prohibited postal clerks from living off 
from the routes to which they were assigned, and 
forbade them to accept free transportation except on 
the routes on which they had to travel for official 
purposes. Postal clerks who work in only one di- 
rection, and this practice is not uncommon owing 
to the fact that the volume of mail in different direc- 
tions is unequal, are returned free in passenger cars, 
while in other cases postal clerks, and even local 
postal employes, are sent to meet trains in the same 
manner. 

RISK ASSUMED BY RAILWAYS. 

The railways are responsible for injuries incurred 
by employes of the Post-office Department, and the 
assumption of this risk is properly to be enumerated 
among the services which the railways perform, or 
at least as a condition which is material in any ex- 
amination of the nature of those services. The posi- 



THE POSTAL DEFICIT. 



59 



tion of the postal car is usually such as to make the 
danger to its occupants, in case of collision, greater 
than that of any other persons on the train, except 
those on the locomotive. The total number of postal 
clerks injured in railway accidents from 1875 to 1899, 
inclusive, was 2,520, of whom 82 were killed, while 
938 others w^ere seriously injured. The following 
statement shows the results of railway accidents dur- 
ing the last five years : 



Year. 



1895 
1896 
1897 
1898 
1899 



Number of 
clerks 


Number 
killed 


Number 
seriously 


in service. 




injured. 


7,045 


7 


50 


7,408 


5 


47 


7,573 


14 


33 • 


7,999 


7 


34 


8,388 


6 


50 



Number 
slightly- 
injured. 



128 

65 

75 

146 

162 



The amounts actually paid by the railways in 
damages growing out of such injuries as are showai 
ill the foregoing are by no means insignificant. 
During the first half of the year 1898 the Southern 
Pacific Railway Company paid out $3,750 for this 
purpose, and an officer of that road estimates that 
the yearly average is five or six thousand dollars. 
The Atchison, Topeka and Santa Fe railroad has 
paid an average of $7,500 per annum for the last 
five years, while during a single year the claims paid 
by the Southern Railway aggregated $15,000, after 
which it still had claims pending settlement which 
altogether amounted to $24,000 more. 



60 THK POSTAL DEFICIT. 



RAILWAY SERVICES SUMMARIZED. 

The more important of the requirements may be 
recapitulated as follows : 

L Mail must go on the fastest train. 

2. Mail service must be carried on any train that the Depart- 
ment selects. 

3. Mail trains must be accorded the right of way over all 
other trains. 

4. No mail may ever be left behind. 

5. Railways must invariably supply suflBcient car space, re- 
gardless of the suddenness or unusualness of the demand. 

6. Mail cars must be furnished with the best appliances that 
science and art can afford. 

7. Mail cars must be placed in the stations where they can 
be easily and conveniently approached. 

8. Railway employes must give the mail their earliest atten- 
tion on the arrival of trains. 

9. Mail must be placed in trains and at termini and in certain 
other case^removed from trains by railway employes. 

10. Mail must be called for and delivered by the railway 
wherever the post-offices are within one-quarter of a mile of 
the railway station. 

., 11. The railway must assume responsibility for accidents to 
postal employes. 

12. Employes of the Department must be carried free of 
charge in passenger coaches when traveling on official business. 

13. Appliances for the receipt of pouches while trains are in 
motion must be supplied and maintained wherever demanded 
by the Department. 

14. Special postal cars and compartments partitioned off from 
other cars must be supplied, lighted, heated, and otherwise 
maintained and provided with space and appliances for dis- 
tributing mail in transit at the demand of the Department. 

By persistent and strenuous insistence upon these 
requirements the Post-office Department has, with 
the cordial co-operation of the railways, built up a 
system of railway mail distribution and transporta- 
tion that is magnificent in its efficiency and marvel- 
ous in the perfection of its adjustment to the demands 



THE POSTAL DEFICIT. 61 

of the public. It should not be forgotten, however, 
that it is a costly service, and involves methods that 
are radically different from those followed in other 
forms of transportation. Mail is not and cannot 
satisfactorily be handled as an ordinary commodity 
of commerce, and the service performed by the rail- 
ways is not comparable with those usually designated 
by the term transportation. This fact was admi- 
rably expressed b}^ Mr. Kruttschnitt, vice-president 
and general manager of the Southern Pacific Com- 
pany, in the paragraph quoted below : 

" We cannot handle the mail as a commodity. The Depart- 
ment, for the benefit of the public, prescribes the most expen- 
sive manner of handling it, and the public is given the very- 
best of service. With freight we can make our own rules. We 
can load cars to the limit of their capacity, and we can hold 
them back a little and put them in trains where the locomo- 
tives are worked up to the limit of their capacity. Indeed, we 
have been studying nothing else for the past three years but 
how to operate our roads with the greatest economy, and we 
have succeeded, in the face of the general fall in rates, in keep- 
ing the properties going through economical methods of opera- 
tion. Day after day the public and the Department represent- 
ing the public is more and more exacting, and the expense to 
us of conducting that service is increasing instead of diminish- 
ing. There is no way by which we can reduce the cost of the 
service, because the facilities are continually being increased." 

RAILWAY COM PEXSATION. 

Having ascertained what the railways do for the 
public in connection with the postal service, it is now 
desirable to see how much and in what manner they 
are paid for those services. 

The actual amount received by all mail carrying- 
railways for the services performed by them during 
the fiscal year ended June 30, 1899, was $35,759,343.93, 
distributed as follows : 



62 THE POSTAL DEFICIT. 

Pay based on weight and distance §31,621,486.12 

Pay based on mileage of full postal cars 3,960,953.86 

Pay for expediting certain mails 176,903.95 

Total §35,759,343.93 

That portion of railway mail pay wliicli has been 
referred to in the foregoing as being based on weight 
and distance is in accordance with a law which was 
passed in 1873, as amended by laws providing for 
successive reductions of ten and five per cent of ex- 
isting rates which became effective respectively in 
1876 and in 1878. This law provides different rates 
per mile of line for different quantities of mail, so 
that the rate per unit of weight decreases as the 
amount carried increases. The following statement 
shows the rates per mile of route that are paid at 
present for different weights of mail and the equiva- 
lent rates per ton per mile : 



Average weight of mails per day carried 
over whole length of route. 



200 pounds 

500 '* 

1,000 " 

1,500 " 

2,000 " 

3,500 " 

5,000 " 

Every additional 2,000 pounds 



Under act of March 


3, 1873, as 


amended 


bv acts of Julv 12, 


1876, and June 17, 


1878. 




Rate per 


Rate per 


mile per 


ton per 


annum. 


mile. 




Cents. 


S42.75 


117.123 


64.12 


70.268 


85.50 


46.849 


106.87 1 


39.039 


128.25 1 


35.137 


149.62 I 


23.424 


171.00 I 


18.740 


21.37 1 


5.855 



THE POSTAL DEFICIT. 63 

It will be observed that the effect of the scale of 
rates shown in the foregoing is that as the amount 
of mail shipped over an}^ route increases the average 
rate per unit of quantity decreases. Proportionate 
increases are accorded for quantities between those 
shown in the table, but no payment is made for an 
amount which is insufficient to require the payment 
of one dollar at the regular rate. Roads which were 
assisted by grants of public land are paid only eighty 
per cent, of the foregoing. The railways are divided 
into routes without regard to their corporate organ- 
ization, and this permits the Government to secure 
cheaper service by availing itself of the shortest 
routes between the points served, and also by concen- 
trating mail upon certain lines. There are about 
2,617 of these routes in the country, and of these 
there were 208 routes on which the rate of payment 
has been fixed, by special agreement, at less than 
$42.75 per mile, the lowest figure provided in the 
law. In order to illustrate further the operation of 
the law, the following table, which has been arranged 
from data collected and presented^ to the Joint Postal 
Commission by Professor Henry C. Adams, is intro- 
duced : 



64 



THE POSTAL DEFICIT. 





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THE POSTAL DEFICIT. 



65 



The statement shows what a large proportion of the 
aggregate mail traffic given to railways is carrier! at 
the lower rates. It shows that nineteen routes, or less 
than one per cent of the total number, perform 29.73 
per cent of the total transportation, measured in tons 
carried one mile, though they receive but 16.27 per 
cent, of the total compensation. On the other hand, 
1,286 routes, or 53.58 per cent of the total number 
and 22.08 per cent of the total mileage, perform less 
than one per cent of the total transportation, though 
they receive 6.49 per cent of the aggregate pay. The 
latter class includes all of the routes which receive 
more than sixty cents per ton per mile. The routes 
that receive from five to ten cents per ton per mile 
perform 62.96 per cent, of the total transportation, for 
which they receive 37.42 per cent, of the total pay. 

The present allowance of pay for full postal cars 
is based on the length of the cars, and consists of a 
certain rate multiplied into the length of the route. 
In order to earn these rates, the car must pass over 
the whole length of the route twice daily. The fol- 
lowing statement shows the rates provided and some 
of their results : 



Length of car in 
feet. 



Kate per mile of 
route per annum. 



Rate per mile run, 
in cents. 



40 
45 
50 

55 or 60 




3.42 
4.11 

5.48 
6.85 



66 THE POSTAL DEFICIT. 

No pay is allowed for compartment cars, though 
the facilities furnished are similar in every respect 
except in quantity to those afforded by full postal 
cars. The primary observation in regard to this I 

portion of railway pay is that it cannot properly be 
considered apart from that portion which is based 
upon weighc and distance. A historical study of 
the subject will show that postal-car pay was pro- 
vided in order to relieve the serious discontent of 
the trunk-line railways over the rates of pay under 
the law of 1873, and at the behest of the officers of 
the Department who feared a reduction in the 
efficiency of the service. It is, therefore, to be con- 
sidered as a part of the general payment and as 
special in form only. It is accorded to the lines 
which receive the lowest rates and furnish the pub- 
lic with the most complete facilities. This will be 
evident from the table below, in which postal-car 
pay is classified according to the rates received on 
the same routes under the weight and distance scale 
of rates : 



THE POSTAL DEFICIT. 



67 





Postal car pay. 


Eate per ton per mile. 


Amount. 


Per cent 
of total. 


60 cents and over 


None. 

$2,435.50 

17,665.00 

50,315.50 

217,631.53 

430,700.05 

463,708.18 

421,548.52 

1,011,839.89 

891,251.45 

73,642.50 

None. 


0.00 


40 to 60 cents 


.07 


30 " 40 " 


.49 


20 '* 30 " 


1.41 


15 " 20 " 


6.08 


12 " 15 " 


12.03 


10 " 12 " 

9 " 10 " .' 


12.95 
11.77 


8 " 9 " 

7 " 8 " 


28.26 
24.89 


6 •' 7 " 


2.05 


5 " 6 " 








Total 


.3,580,738.12 


100.00 



That portion of railway mail pay which has been 
designated as being allowed in return for especially 
expedited service is allotted to certain lines which 
carry mail between the cities of New York and New 
Orleans, and between Kansas City and Newton, 
Kansas. It is probably allowed in view of the belief 
that the regions traversed by these routes are too 
sparsely settled and the volume of mail forwarded 
over them too small to w^arrant service of the quality 
that is desired by the Department and believed to 
be necessary on account of the character of the mails 
handled on them. The entire amount of this pay, 
which is usually denominated "special-facility pay" 
constitutes less than one-half of one per cent of the 



68 THE POSTAL DEFICIT. 

aggregate mail pay, and it is therefore too insignifi- 
cant to warrant extended treatment. 

It is evident from the foregoing that there is no 
fixed or definite relation between postal receipts and 
the amounts paid for railway mail services. The 
practical application of the postal principle by the 
United States Government has resulted in a system 
of postal charges in which distance is absolutely 
ignored. Congress could not fail to recognize the 
impropriety of attempting to secure railway services 
upon similar terms, and therefore adopted the plan 
contained in the law of 1873. This plan recognizes 
both weight and distance as factors, and also pro- 
vides an allowance that recognizes space in the form 
of postal-car pay. The relation between these al- 
lowances is so disproportionate to the extent in which 
the different elements enter into the services per- 
formed that the recognition can only be regarded as 
a formal concession of the principle, and is impor- 
tant in that aspect only. An adequate allowance for 
the space occupied would certainly include compen- 
sation for compartment cars, and the total payment 
under it would probably encroach materially upon 
the sum now paid on the weight basis. 

Among the noteworthy results of the system in 
vogue is the fact that the railways frequently fur- 
nish postal cars for which they do not receive postal- 
car pay. It is in evidence that the Chicago, Mil- 
waukee, and St. Paul railway ran a full line of such 
cars over a route 230 miles in length for several years 
without receiving any payment. In fact, it appears 



THE POSTAL DEFICIT. 69 

to have come to be an understanding among railway 
officers that they must furnish all facilities that are 
called for and accept whatever compensation the 
Department can and will allow. 

WEIGHING. 

As weight is the basis of the greater portion of 
railway mail pay, it follows that means must be pro- 
vided for ascertaining, at regular intervals, the 
weights that are carried over the several routes. 
The law on the subject reads as follows: 

**.... the average weight to be ascertained in every 
case, by the actual weighing of the mails for such a number of 
successive working days, not less than thirty, at such times 
after June thirtieth, eighteen hundred and seventy-three, and 
not less frequently than once in every four years, and the re- 
sult to be stated and verified in such form and manner as the 
Postmaster General may direct." 

The method adopted by the Department in the 
execution of the foregoing provision of law is to 
divide the country into four great weighing districts, 
and to conduct a weighing in each of these districts 
once in four years. The districts are taken in suc- 
cession, one of them being w^eighed each year, and 
never more than one in the same year. 

As the basis of payment, established by the statute, 
is pounds carried the whole length of the route, 
while in actual practice mail is put off and received 
at every intermediate station at which trains stop, and 
by means of cranes and catchers at many stations 
where they do not stop, it is necessary to reduce all 
mail to its equivalent in pounds carried over the 



THE POSTAL DEFICIT. 



whole route. Thus, if the length of a route is one 
hundred miles and a particular lot of mail, weighing 
one thousand pounds, is carried between two inter- 
mediate points which are twenty-five miles apart, it 
appears in the result as two hundred and fifty pounds 
carried one hundred miles. The weight which is 
the basis of payment is thus made up of a large 
number of items, and it is wholly incorrect to con- 
sider it as a single shipment forwarded over a dis- 
tance equal to the length of the route. The follow- 
ing weighing sheet for an assumed route has been 
copied from Professor Adams' report to the Joint 
Postal Commission : • 





Distance 
between 
stations. 


Weight of mail. 


Pounds 
carried 
between 
stations. 


Pound- 
mileage 
of mail. 


Average 
weight car- 
ried over 
whole route. 


stations. 


Pounds 
taken on. 


Pounds 
put off. 


A 


Miles. 


5,000 
7,000 
.3,000 


4,000 
5,000 
6,000 


5,000 
8,000 
6,000 


50,000 

96,000 

168,000 




B 


10 
12 

28 




C 




D 










Totals and 
result 


50 


15,000 


15,000 




314,000 


6,280 





The foregoing relates to a supposititious route fifty 
miles in length, with two stations in addition to its 
termini. The train arriving at station B brings 
5,000 pounds of mail, 4,000 of which is put off". To 
the difference is added 7,000 pounds received at B, 
and the sum is multiplied b}^ the distance between 
B and C, giving a pound-mileage of 96,000. This, 
added to similar accounts obtained between other 



THE POSTAL DEFICIT. 71 

pairs of stations, gives the total pound-mileage of 
314,000, which being divided by 50, the length of 
the route in miles, the result is 6,280, the equivalent 
of the total movement in pounds carried the entire 
length of the route. A weighing sheet similar to 
this could be made for each mail train traversing all 
or a part of each route, and the sum of the amounts 
shown in the lower left-hand corner would indicate 
the total weight on which the payment should be 
calculated. No one who bears this method of deter- 
mining the weight basis of payment in mind will 
fall into the error of assuming that payments are for 
single and continuous shipments. 

The weighing is done under the supervision of 
officers of the Railway Mail Service and by persons 
appointed by the Postmaster General. It usually 
extends throughout a period of about thirty days. 

A good deal has been said, chiefly by means of 
covert intimations and innuendo, in regard to fraud- 
ulent increases of mail during the weighing periods 
for the purpose of securing to the railw^ays increased 
and excessive compensation. The subject has re- 
ceived careful examination, both on the part of the 
Department and of the Joint Postal Commission, and 
up to the present time the most searching investiga- 
tions have brought to light but two attempts of this 
kind, both of which were promptly detected. One 
of these attempts involved a weight of 200 pounds 
on a railway only 37 miles long, and the other was of 
only slightly greater importance. The unanimous 
testimony of the officers of the Post-office Depart- 



72 THE POSTAL DEFICIT. 

ment, including those of the Railway Mail Service, 
and of all who have studied the methods in use, is 
that it is quite impossible to pad the mails during the 
weighing period without the facts being immediately 
detected by the Department. The following is from 
the testimony of Mr. 0. L. Teachout, now a railway 
officer, but for many years Superintendent of the 
Eleventh Division of the Railway Mail Service : 

"I had charge— full charge — of the weighing in 1894, as su- 
perintendent of the eleventh division. I had virtual charge of 
the weighing in 1890, being assistant superintendent of the di- 
vision, and I never, in all the experience I have had, saw but 
two suspicious cases. 

" Q. (By Mr. Moody.) Do you think that there is any danger 
of fraud in the weighings where you have honest Government 
officials, honest superintendents, and honest clerks? 

"A. I don't think there is any particle of danger 

I have been in the service as postal clerk and weighed mail, [ 
know that when a clerk is on the road he notices anything out 
of the ordinary. You cannot send 500 pounds of mail of any 
peculiar kind over any ordinary line without the postal clerk 
knowing about it." 

The investigation of this subject resulted, how- 
ever, in bringing into prominence the very singular 
fact that while any attempt on the part of the rail- 
ways to increase the volume of mail during the 
w^eighing period is universally condemned, there are 
numerous officers of the Government who habitu- 
ally withhold mail during weighings, and that this 
practice has the sanction of the Department. Of 
course, the consequence of such withholding of mail 
is to reduce the railway's compensation during the 
succeeding four years below the figure which would 
have been fixed had the mail been permitted to go 
forward in its customary volume. Yet while an 



THE POSTAL DEFICIT. 73 

effort to increase the volume during the weighing 
has been made an offense punishable by the Federal 
courts, the effort to decrease it is considered as a com- 
mendable act, if not, indeed, one indicated as a duty. 

If the facts really indicate, as they apparently do, 
a principle upon which the Post-office Department 
and many other branches of the Government habit- 
ually act, there must be an enormous weight of 
mail which is never permitted to be represented in 
the weighings. Former Third Assistant Postmaster 
General Hazen has said that during his term of 
office it was^lie practice of the Treasury Department 
to ship roller-top desks, carpets, etc., as mail matter, 
and that it was customary for the Geological Survey 
to ship tents, valuable instruments, and other para- 
phernalia in the same manner. In at least one in- 
stance, alluded to by Mr. Loud, the Government 
brought an entire train-load of coin, valued at 
$20,000,000, across the continent as registered mail. 
Postal supplies are also believed to be withheld at 
weighing periods, though they move in large vol- 
ume at all other times. 

There are other reasons why the results of the 
weighings do not constitute a fair average of the 
daily movement throughout the year. It is a matter 
of general knowledge that mails are much heavier 
during the holiday season than at any other time, 
yet weighings are never held then. Business 
houses usually send their catalogues in the fall, and 
in fact all mail is heavier during the fall and win- 
ter seasons than when the weighings are taken. 
6 



74 THE POSTAL DEFICIT. 

The facts that have been mentioned are insignifi- 
cant, as causes of the disparity between mail traffic 
and the assumed mail movement that is made the 
basis of mail pay, when compared with the fact that 
the weighings are held but once in four years. The 
statement of the latter fact is all that is necessary to 
convince any one who is at all familiar with the de- 
velopment of postal business that the railways must 
always carry more mail than they are paid for car- 
rying. Especially is this true in regions where 
population is rapidly developing or where many 
new industries of the kind which make extensive 
use of the mails are being inaugurated. A recent 
example of this occurred on the Denver and Rio 
Grande railroad, which for the four years that 
ended with June 30, 1898, was paid on the basis of 
the weights taken in April and May, 1894, when the 
State of Colorado and the country were suffering from 
serious financial depression. S oon thereafter the great 
Cripple Creek gold region was opened, populated, 
and developed to the highest degree of activity. In 
two years from the time of weighing the district had 
an estimated population of 35,000, and the mails to 
and from the district were carried by the Denver 
and Rio Grande and its connection, the Florence 
and Cripple Creek railroad, without the former re- 
ceiving any additional compensation until July 1, 
1898. Under normal circumstances it is probable 
that the increase of mail for a given quadrennial 
period would be about equally divided amoug each 
of the years. The reader can easily see, from the 



THE POSTAL DEFICIT. 



75 



following statement, how much mail must be car- 
ried annually that is not paid for if this assumption 
is even approximateb^ correct : 





Ton-mileage of all routes. 


Weighing. 


Latest 
weighing. 


Next 
preceding 
weighing. 


Diflference. 




Amount. 


Annual 
average. 


First 


73,227,667 
90,622,588 
47,620,441 
61,243,321 


66,819,535 
70,379,429 
42,196,164 
46,626,693 


6,408,132 
20,243,159 

5,424,277 
14,616,628 


1,602,033 
5.060,790 
1,356.069 


Second 

Third 


Fourth 


3,654,157 



If the increases in the foregoing districts are dis- 
tributed equally among the years separating the 
respective weighings the average amount carried 
by the railways, but not paid for, must have been 
11,673,049 ton-miles per year. At the average rate 
of pay prevailing in the United States the pay 
for this amount of mail transportation would be 
$1,466,952. 

DECLINE IN RATES FOR RAILWAY MAIL SERVICE. 

The law under which the railways are paid for 
carrying mail, as has been observed, was so framed 
that as mail increases the rate per unit of weight de- 
creases. The extent of the downward movement 
that was insured by those who formulated the pres- 
ent law will be indicated by a few examples. The 
following table was compiled from data in Professor 



76 THE POSTAL DEFICIT. 

Adams' report. In a later portion of this paper at- 
tention will be called to certain methods adopted 
by Professor Adams which have resulted in making 
the average rates obtained by him considerably 
higher than those actually paid by the Government. 
The table will, however, fairly serve the present pur- 
pose of showing that there has been a substantial de- 
cline in mail rates. It is to be observed also that 
Professor Adams' methods do not result in an over- 
statement of this decline for separate groups. The 
groups shown are those adopted for the classification 
of railway statistics by Professor Adams, as statisti- 
cian to the Interstate Commerce Commission, and are 
roughly described as follows : 

Group I. Maine, Xew Hampshire, Vermont, Massachusetts, 
Rhode Island, and Connecticut. 

Group II. Delaware and Maryland, exclusive of that portion 
of New York and Pennsylvania lying west of a line drawn from 
Buffalo to Pittsburg via Salamanca and inclusive of that portion 
of "West Virginia lying north of a line drawn from Parkersburg 
east to the boundary of Maryland. 

Group III. This group em'braces the States of Ohio, Indiana, 
and the southern peninsula of Michigan ; also that portion of 
the States of New York and Pennsylvania lying west of a line 
drawn from Buffalo to Pittsburg via Salamanca. 

Group IV. This group embraces the States of Virginia, North 
Carolina, South Carolina, and that portion of the State of West 
Virginia lying south of a line drawn east from Parkersburg to 
the boundary of Maryland. 

Group V. This group embraces the States of Kentucky, Ten- 
nessee, Mississippi, Alabama, Georgia, Florida, and that por- 
tion of Louisiana east of the Mississippi river. 

Group VI. This group embraces the States of Illinois, Wis- 
consin, Minnesota, the northern peninsula of the State of Michi- 
gan, and that portion of the States of North Dakota and South 
Dakota and Missouri lying east of the Missouri river. 

Group VII. This group embraces the States of Montana, 
Wyoming, Nebraska, that portion of North Dakota and South 
Dakota lying west of the Missouri river, and that portion of the 
State of Colorado lying north of a line drawn east and west 
through Denver. 



THE POSTAL DEFICIT. 



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"78 THE POSTAL DEFICIT. 

Group VIII. This group embraces the States of Kansas, 
Arkansas, that portion of the State of Missouri lying south of 
the Missouri river, that portion of the State of Colorado lying, 
south of a line drawn east and west through Denver, and the 
Territories of Oklahoma, Indian Territory, and that portion of 
New Mexico lying northeast of Santa Fe. 

Group IX. This group embraces the State of Louisiana, ex- 
clusive of the portion lying east of the Mississippi river, the 
State of Texas, exclusive of that portion lying west of Oklaho- 
ma, and the portion of New Mexico lying southeast of Santa Fe. 

Group X. This group embraces the States of California, Ne- 
vada, Oregon, Idaho, Washington, and the Territories of Utah, 
Arizona, and that portion of the Territory of New Mexico lying 
southwest of Santa Fe. 

From the foregoing it appears that the average 
rate per ton per mile paid to the railways declined 
in twenty-five years throughout the United States 
from 26.420 to 12.567 cents, or 52.43 per cent. In 
the first group the decline amounted, from 1870 to 
1898, to 67.80 per cent. 

The decline in the rate per ton per mile is con- 
stantly being retarded by the extension of the mail 
service into sparsely settled regions and over routes 
on which the movement is light in volume, and the 
rate in consequence relatively high. The utiliza- 
tion of the railways commenced with those having 
the greatest volume and has extended gradually to 
those serving the more thinly populated portions of 
the country. 

In 1873 the postal service made use of but five- 
sevenths of the railway mileage of the country ; at 
the present time it utilizes nearly nine-tenths. It 
follows from the fact just mentioned that the real 
reduction can be discovered only by an examination 
of the results on particular routes. 

The following statement shows such changes : 



THE POSTAL DEFICIT. 



79 



RATES PER TON PER MILE IN CENTS. 

(Not including postal-car pay.) 



Between- 



Concord and White River Junction. 

Boston and Albany 

New York and Buflfalo 

Canandaigua and Tonawanda 

New York and Philadelphia 

Wevertoii and Hagerstown 

Atlanta and Westpoint 

Nashville and Hickman 

Glasgow Junction and Glasgow 

Dayton and Toledo 

Columbus and Pittsburg 

Peoria and Rock Island 

Milwaukee and La Crosse 

Mankato and Wells 

Hannibal and Sedalia 

Kansas City and Denver 

Topeka and Kansas City 

Union Pacific Transfer and Ogden. . 

Salt Lake City and Stockton 

San Francisco and Ogden 

Grafton and Parkersburg 

Columbia and Greenville 

Cincinnati and Chattanooga 

Chicago and Milwaukee 

Chicago and Burlington 

Chicago and Davenport 

St. Paul and Missoula 

Dubuque and Sioux City 

St. Louis and Atchison 

St. Louis and Kansas City 

Little Rock and Arkansas City 

Houston and Orange 

Valley and Stromburg 

Columbus and Norfolk 

Marion and Chamberlain 

Flandreau and Sioux Falls 



Years. 



1879, 1880, 
1881, or 
1882. 



18.8 

8.0 

6.6 

118.0 

6.4 

74.0 

18.3 

46.7 

93.9 

32.0 

7.3 

63.8 

11.5 

260.0 

27.0 

168 

10.8 

8.0 

266.0 

8.6 

8.4 

52.3 

29.6 

19.5 

12.4 

12.5 

8.8 

28.0 

12.0 

35.6 

74.8 

35.5 

74.1 

104.5 

71.2 

47.9 



1894, 1895, 
d896, and 
1897. 



10.2 

6.4 

6.0 

70.0 

5.8 

54.0 

8.1 

19.6 

58.5 

9.5 

6.4 

41.2 

6.6 

56.8 

20.2 

11.0 

7.6 

6.8 

156.0 

7.2 

7.3 

39.7 

9.4 

7.9 

6.3 

8.3 

7.7 

10.4 

6.4 

10.4 

4L2 

12.0 

56.5 

43.1 

28.0 

42.1 



80 THE POSTAL DEFICIT. 

The least reduction for any route shown in the 
foregoing is 9.09 per cent. There are many showing 
over 50 per cent, decline, and the greatest amounted 
to 78.15 per cent. The illustrations were taken at 
random, the selections being made by an officer of 
the Post-office Department. According to the testi- 
mony of Mr. Erastus Young, general auditor of the 
Union Pacific s^^stem, the rate paid that company for 
carrying mail between Cheyenne and Denver de- 
clined, from 1880 to 1898, from 62.5 cents per ton per 
mile to 13 cents, or 79.20 per cent. It is possible to 
compare the reductions in mail rates with those in 
the charges for other services which are rendered by 
the railways. Such comparisons have already been 
given for the United States as a whole. The follow- 
ing table shows comparisons between the rates ap- 
plied to mail, passenger, and freight traffic respect- 
ively during the earliest and latest years from 1890 
to 1898 in w^hich the mail was weighed : 



THE POSTAL DEFICIT. 



81 





Year. 


Rate per mile in cents. 


Per cent of decline. 


Territory cov- 
ered. 


1 


ngers 
pas- 
er. 






CD 


+i 






1 


asse 
per 
seng 




'S 


1 








s 


a. 


ta 


S 


cS 


fo 


United States. 


1890 


14.968 


2.167 


0.941 










1898 


12.567 


1.973 


.753 


16.01 


8.95 


19.98 


Group I 


1890 


13.724 


1.912 


1.373 










1898 


11.248 


1.827 


1.176 


18.04 


4.45 


14.35 


Group II 


1890 


10.952 


2.029 


.828 










1898 


9.975 


1.786 


.617 


8.92 


11.98 


25.48 


Group III. . . . 


1893 


11.534 


2.076 


.663 










]897 


10.933 


2.001 


.605 


5.21 


3.61 


8.75 


Group IV.... 


1893 


15.387 


2.406 


.763 










1897 


13.885 


2.262 


.648 


9.76 


5.99 


15.07 


Group V 


1893 


18.660 


2.435 


.927 










1897 


16.434 


2.337 


.864 


11.93 


4.02 


6.80 


Group VI.... 


1892 


15.089 


2.292 


.983 










1896 


14.117 


2.181 


.917 


6.44 


4.84 


6.71 


Group VII... 


1891 


13.410 


2.501 


1.333 










1895 


12.400 


2.486 


1.098 


7.53 


0.60 


17.63 


Group VIII.. 


1891 


16.216 


2.377 


1.217 










18v^5 


14.660 


2.275 


1.161 


9.60 


4.29 


4.60 


Group IX. . . . 


1891 


26.844 


2.587 


1.363 










1895 


23.950 


2.398 


1.253 


10.78 


7.31 


8.07 


Group X 


1891 


16.082 


2.328 


1.631 










1895 


14.063 


2.153 


1.261 


12.55 


7.52 


22.69 



The foregoing table shows that, for the United 
States, mail rates declined 16.04 per cent in the eight 
years from 1890 to 1898, while passenger rates de- 
clined but 8.95 per cent. -During the same period 
the decline in freight charges amounted to 19.98 
per cent. 

An examination of the averages for the several 
geographical districts, in accordance with which the 



82 



THE POSTAL DEFICIT. 



data are classified, shows tliat tlie decline in mail 
rates has varied from 5.21 per cent in group III 
to 18.04 per cent in group I. The range in passen- 
ger charges was from six-tenths of one per cent to 
11.98 per cent, and in freight rates from 4.60 to 
25.48 per cent. In considering the extent of the de- 
cline of each class of rates for each group, the differ- 
ent periods of time which the respective comparisons 
cover should be borne in mind. It appears that the 
decline in mail rates has exceeded that in passenger 
rates in every group but one, and has also exceeded 
that in freight rates in four of the ten groups. The 
fact that mail invariably receives passenger train 
service should not be lost sight of while examining 
these data. 

Comparisons of average mail rates, in which all 
routes on particular railways are represented, with 
other charges via the same roads can also be made. 
Such comparisons for two railways follow : 





1 


Rates per mile in 
cents. 


Per cent of decline. 


Eailways. 


1 


Passengers 
per pas- 
senger. 




^ o 


Passengers 
per pas- 
senger. 


ll 

P 
c2 


Chicago &^ 
Northwestern > 
railway.. .... J 

Union Pacific j 
railroad ] 


1885 
1897 

1888 
1897 


21.78 
13.87 

9.4 

7.2 


2.879 
2.053 

2.238 
2.057 


1.194 

.978 

1.173 

.988 


36.32 
23.40 


13.70 
8.09 


18.09 
15.77 



THE POSTAL DEFICIT. 8d 

The foregoing does not require extended com- 
ments. It shows that on at least two great railways 
the operation of the law providing mail pay has been 
more effective in securing reduced charges than the 
natural economic forces of which so much is written 
in producing corresponding changes in rates on other 
traffic. 

After examining the foregoing, one is prepared for 
the statement that the percentage of the total postal 
expenditure paid out for transportation has declined 
without much interruption since railw^ays began to 
carry the mail. This proportion amounted to 68.6 
per cent in 1790, and there had been no substantial 
change up to 1837, when railwa}^ mail service began. 
The following statement will be of interest in this 
connection : 

PERCENTAGE OF POSTAL EXPENDITURES PAID FOR TRANSPORTATION. 



Decade. 


Highest. 


Lowest. 


Average. 


1837-1846 


880 

62.2 

82.6* 

48.5 

51.1 

44.5 


63.7 
53.6 
39.0 
43.9 
43.8 
42.1 


69.24 


1847-1856 


56.43 


1857-1866 • 

1867-1876 

1877-1886 


52.26 
46.52 
46.60 


1887-1896 


43 29 







* Due to increased expenditure for star-route service. 

The percentages of all postal expenditures paid for 
transportation in 1897 and 1898 were 42.1 and 41.2 
respectively. The foregoing results have been ac- 
complished very largely through the substitution of 



84 THE POSTAL DEFICIT. 

railways for more costly means of transportation in 
the mail service. 

No one can make a careful and unbiased exami- 
nation of the present laws for paying raijways for the 
services which they perform without being strongly 
impressed that they were framed, from the point of 
view at least of securing such services on the most 
favorable terms consistent with efficiency, with sin- 
gular wisdom. They have worked steadily and rap- 
idly toward the reduction of the average rate per 
unit of weight, and such conclusions as are justified 
by the limited data available indicate that the de- 
cline per unit of space has been much greater. 

THE ATTACK OX THE PRESENT SYSTEM. 

In spite of the decline that has taken place and the 
improvement in railway mail service by which it 
has been accompanied, there has been considerable 
effort to show that the present rates are excessive, 
and propositions for their reduction have been rather 
noisily advocated in certain quarters. The reduc- 
tions proposed have ranged from about 10 per cent 
of the present rates to 75 per cent. It is probably 
due to the gentleman who made the latter sugges- 
tion to add that he advocated a present reduction of 
25 per cent, to be followed by an investigation which 
he felt assured would show that the greater reduc- 
tion was desirable. A United States Senator intro- 
duced an amendment to the Post-office appropriation 
bill providing for a reduction of one-third in the 
present rates. 



THE POSTAL DEFICIT. 85 



MR. FINLEY ACKER. 

It is unfortunate that the adverse discussion of the 
present rates of mail pay should be so thoroughly 
identified with one or two men whose erroneous state- 
ments, probably made in good faith, have so misled 
the public that it is impossible thoroughly to present 
the current situation without references of a personal 
character. The most prominent of these gentlemen 
is Mr. Finley Acker, a manufacturing confectioner 
of Philadelphia, a man evidently of much public 
spirit, of unbounded enthusiastn and persistence, and 
with very limited knowledge of statistical methods 
or of economic science. In 1898 Mr. Acker was a 
representative of the Philadelphia Trades' League in 
the National Board of Trade, and as such he man- 
aged to secure the adoption of a series of resolutions 
regarding mail pay which have constituted the basis 
of the attack upon the present law. These resolu- 
tions constitute a series of misstatements, either in 
express terms or by implication. They dealt, how- 
ever, with matters not familiar to the members of 
that body, and were adopted without more than 
formal discussion and probably without attracting 
much notice, or anything like a complete realization 
of their importance. The statements that have been 
shown to be erroneous and the facts now established 
in regard to each subject are shown in parallel columns 
below : 



86 



THE POSTAL DEFICIT. 



MISSTATEMENTS IN RESOLUTIONS. 

First. That railway mail pay 
had not declined in twenty 
vears. 



Second. That the rate paid 
to railroads for hauling mail 
averaged $40 per ton per 100 
miles, or 40 cents per ton per 
mile. 



Third. That the average pay- 
ment for carrying mail average 
distance by rail was $6.58 per 
100 pounds. 



Fourth. That the Depart- 
ment pays $6,250 per annum 
for postal cars. 



THE TRUTH. 

Average mail rate per ton 
per mile in 1878, 23.167 cents ; 
in 1898, 12.567 cents ; decline, 
45.75 per cent. 

Average mail rate, $12.57 per 
ton per 100 miles, or 12.567 
cents per ton per mile; 53.90 
per cent of mail transportation 
by rail charged less than 9 cents 
per ton per mile ; only 2.86 per 
cent pays as much as 40 cents 
per ton per mile. 

Average distance hauled, 438 
miles ; average rate per 100 
pounds per mile, 6.2835 mills; 
product (average rate for aver- 
age distance), 82.75. 

Number of postal cars June 
30, 1898, 921; annual rate of 
payment, same date, §4,175,- 
724.86 ; average per postal car, 
$4,533.90. Number of compart- 
ment cars furnished free, 2,585. 



The first misstatement was indirect and is found 
in the words, " The law determining the rates for 
hauling mail matter has not been modified in twenty 
years." Xo one who examines the context can doubt, 
however, that this was meant to convey the impression 
that there had been no reduction, and in his speech 
in regard to the resolutions, Mr. Acker did so state, 
as will appear from the following extract : 

'* The free discussion of Mr. Loud's bill upon the floor of the 
House resulted in directing attention to another feature, which 
may bear as direct a relation to the causes of the deficit as the 
abuses connected with second-class matter, and that is the ex- 



THE POSTAL DEFICIT. 87 

cessive rates which the Government is said to be paying the 
railroads for the transportation of mail matter, and ivhich rates 
have not been changed during the past twenty years.^'"^ 

The truth is that Mr. Acker is an enthusiastic ad- 
vocate of the reduction of letter postage to one cent 
per ounce. He has been led by his desire to aid in 
the accomplishment of that result to urge a reduc- 
tion in railway pay that would offset the loss in 
revenue that, he thinks, would result from a 50 
per cent reduction in rates for letter mail. He has 
made no substantial contribution to the investiga- 
tion of railway mail pay, but has surrounded the 
discussion with voluminous misstatements and vio- 
lent prejudices that have grown out of them. 

In spite of his voluminous contributions to the 
discussion there would be no value in a lengthy ex- 
amination, of his arguments. His final word seems 
to be that mail transportation is governed by what 
he calls the " commutation principle," and while this 
is not as evidently absurd as the suggestion that the 
half rates charged children show that railways make 
passenger rates on a weight basis, it is equally use- 
less as an aid to a reasonable conclusion. Commu- 
tation passenger rates, to which Mr. Acker refers, 
furnish one of the most perfect examples of the ad- 
justment of rates with the idea of fostering traffic by 
means of the lowest practicable charges. They in- 
volve a careful and constant study of the ability of 
travelers to meet them, and their prompt modifica- 
tion in the face of changed conditions is essential to 

* The italics are the present writer's. 



88 THE POSTAL DEFICIT. 

satisfactory results. They are also closely connected 
with suburban freight traffic, and hence can be made 
exceptionally low. 

The value of Mr. Acker's testimony before the 
Joint Postal Commission, which includes all of the 
statements made before the National Board of Trade 
as well, has been appraised by Professor Adams. 
When he was last before that commission, the follow- 
ing colloquy occurred between Mr. Loud and Pro- 
fessor Adams : 

"Mr. Loud: Have you examined Mr. Acker's testimony, 
Professor ; if so, of what value is it as a guide to our action ? 

"Mr. Adams: I cannot think that Mr. Acker's testimony is 
of any very great importance. It is some time since I read it. 
I read it immediately upon its being published, and so far as 
his argument rests upon the average haul of passenger and 
freight, it is not correct, because he misused the figuies. And 
then this report on the weighings of mails has come out since 
then, and that shows that his estimate of the average haul of 
mail is also incorrect." 

Professor Adams was accorded an opportunity to 
revise the testimony given by him on the occasion 
referred to, and in the revision he made the forego- 
ing still stronger. The following may be taken, 
therefore, as representing his deliberate judgment : 

*' On the whole, however, I cannot think Mr. Acker's testi- 
mony will prove to be very helpful. When he first appeared 
before this commission he rested his case upon an erroneous 
statement of the rate per ton per mile, and upon his second 
appearance he rested his argument upon an erroneous state- 
ment relative to the average length of haul for mail, for freight, 
and for passengers." 



THE POSTAL DEFICIT. 89 



MR. JAMES LEWIS COWLES. 

Next to Mr. Acker, the man who has been most 
influential in determining the form of the attack is 
Mr. James Lewis Cowles, of Farmington, Connecti- 
cut. Mr. Cowles is the author of a book entitled 
"A General Freight and Passenger Post," in which 
he advocates uniform fares, regardless of distance, 
for each class of accommodations in passenger trains 
and similarly adjusted charges for freight. It is 
quite natural that any one who believes that one dol- 
lar would be a fair charge for carrying a passenger 
from New York to San Francisco should regard the 
present scale of postal pay as excessive. Mr. Cowles' 
ideas concerning the proper scope of the postal serv- 
ice are partially expressed in the following extract 
from the testimony taken by the Joint Postal Com- 
mission : 

" Q. I want to get at something. I understand that the 
remedy which you suggest is embodied in your bill ? 

"A, Yes, sir. 

" Q. Let me see if I understand it correctly. Is it proposed 
that the Post-office Department, together with the Interstate 
Commerce Commission, should extend the postal business of 
the country so as to cover all public transportation of persons, 
baggage, parcels, and general freight, and that it shall do that 
at a rate for, say, passengers ranging from five cents to five dol- 
lars per trip ? 

"A. From five cents to one dollar per trip for ordinary cars, 
but where you use parlor cars 25 cents extra." 

The questions in the foregoing were by Mr. Moody, 
answers by Mr. Cowles. The following, containing 
answers by Mr. Cowles to questions by Mr. Catchings, 
is also instructive : 
7 



90 THE POSTAL DKFIClT. 

"Q. Why not carry all of the freight of the people, too? 

"A. We should, most assuredly. I want to say simply this 
much : That was the original purpose of the post-office as run- 
ning back to the time of James VII in England. 

" Q. I mean carry the freight. 

"A. I mean precisely that. 

" Q. And the people, too ? 

"A. And the people, too. 

"Q. Do you think the Government should own the trans- 
portation lines of all kinds ? 

"A. I think all public transportation should be done by the 
Government. 

*'Q. Railroads, telephones, telegraphs, express business, 
everything? 

"A. Most assuredly. That is precisely what my bill con- 
templates, and just precisely what my book leads up to, and 
just precisely what the conservative men of the city of Boston 
are looking forward to." 

Though Mr. Cowles' book has constituted an 
arsenal for those Avho have attacked the present 
system, he has contributed no facts to the discussion. 
It is obvious, therefore, that any time spent in the 
examination of his conclusions by those who dis- 
agree radically with the premises upon which they 
are dependent would be quite useless. 

It would be possible to accumulate evidence 
almost indefinitely all tending to establish the fact 
that the misstatements that have been referred to 
constitute the foundation of whatever public senti- 
ment antagonistic to the present system has existed 
or can be found now to exist. Thus Dr. Spahr, of 
the editorial staff of the Outlook, a most influential 
periodical, repeats the misleading statement that 
there has been no reduction in railway mail pay 
since 1878, and declares that this is one of " a few 
broad facts " which led his journal to take the ground 
that " the railroads were extravagantly overpaid." 



THE POSTAL DEFICIT. 91 



THE INVESTIGATION. 



Congress naturally felt the force of the public 
clamor thus aroused, and some of its members were 
led to urge action so drastic in its nature that had 
the measures they proposed been adopted the result 
must have been disastrous in the extreme. Wiser 
and more conservative minds recognized the danger, 
and some saw at the outset that the allegation that 
rates were extortionate was based upon misstate- 
ments and would fall to the ground when the latter 
were uncovered. Under these circumstances Con- 
gress very wisely and properly decided upon an in- 
vestigation, and a Joint Postal Commission, consist- 
ing of four members of the Senate and an equal 
number of members of the House of Representatives, 
was provided for in the postal appropriation bill, 
which was approved by the President on June 13, 
1898. This commission, w^hich is still in existence, 
was directed — 

"to investigate the question whether or not excessive prices 
are paid to tiie raih'oad companies for the transportation of the 
mails and as compensation for postal-car service, and all 
sources of revenue and all expenditures of the postal service, 
and rates of postage upon all postal matter." 

Work in accordance with this mandate began at 
once and continues at the present time. The Com- 
mission has collected and published an exceedingly 
valuable mass of testimony. This testimony and 
the data collected by the agents especially employed 
to investigate different phases of the questions sub- 



J^2 THE POSTAL DEFICIT. 

mitted to the Commission contain material for a most 
accurate and complete description of postal activities 
and methods. This information has been very lib- 
erally drawn upon in the preparation of the present 
work. 

THE ADAMS REPORT. 

One of the most important steps taken by the 
Commission was the employment of Professor Henry 
C. Adams, head of the department of economics in 
the University of Michigan and statistician to the 
Interstate Commerce Commission, to whom was dele- 
gated the duty of compiling, arranging, and present- 
ing such statistical data as would throw light upon 
the subjects of the investigation. Though the in- 
structions given to Professor Adams have not been 
made public, it appears that the Commission also 
directed him to present such recommendations as 
seemed to him desirable. 

Professor Adams brought to this work a high 
reputation both as a statistician and as an economist. 
He had been favorably known to the public and 
especially to railway men for many years on account 
of his connection with the statistical work of the In- 
terstate Commerce Commission and of the Eleventh 
Census. Had he approached the grave and difficult 
problems with which he had to deal in the broad 
and impartial spirit of an arbitrator, with an in- 
flexible desire to weigh with the utmost care the 
considerations on both sides, the greatest good might 
have resulted from his employment. Unfortunately, 



■ THE POSTAL DEFICIT. 93 

however, Professor Adams appears at the outset to 
have misconceived the objects which Congress wished 
to attain by means of the Commission. He appears 
to have been dominated throughout his entire inves- 
tigation by the idea that Congress had prejudged the 
case and had delegated to the Commission, not the duty 
of impartially investigating the facts, but that of con- 
triving means to secure from the railways, in the 
form of a reduction in mail pay, a material contribu- 
tion to the elimination of the postal deficit. In 
accordance with this idea, his conception of his 
own duties as an expert employe of the Commis- 
sion appears to have been that he must devise a 
practical scheme for the reduction. It is necessary 
to introduce this personal aspect of the case because 
of the paramount importance of the work accom- 
plished by Professor Adams, which is, at the present 
time, the only argument in favor of lower railway 
mail pay that has not been shown to be based upon 
gross misrepresentations. It is also the only one 
that is sufficiently scientific in form or method to 
receive the respectful attention of a student. The 
importance attached by the Commission to the report 
rendered by Professor Adams as the result of his 
labors was indicated by Mr. Loud, when at a public 
hearing on April 7, 1900, the latter addressed the 
former as follows : 

" . . . it must be admitted that if your report can be 
fully substantiated, it must end the case." 

The statement that Professor Adams believed him- 
self to be charged with the duty of devising a scheme 



94 THE POSTAL DEFICIT. 

for eliminating, at least a large part of the postal 
deficit at the expense of the railways would not be 
made on slight evidence, and should not be accepted 
unless established in the most complete and irrefu- 
table manner. There need be no doubt, however, 
upon this subject. Professor Adams has, with most 
laudable candor, taken the public fully into his 
confidence and explained wdth considerable detail 
the impressions under which he proceeded. In the 
formal report which contains the results of his labor 
he declares : _ 

"If, then, a reduction in railway mail pay is necessary, or 
even desirable, for the interests of the postal service (and this 
may be assumed as the judgment of Congress, since otherwise this 
question would not have been formally raised*) . . . " 

The foregoing is equivalent to saying that Con- 
gress would not provide for an investigation unless 
it had already come to a conclusion concerning the 
subject to be investigated. It should be compared 
with the clause, already quoted, providing for the 
Commission, which statesclearly that the duty of the 
Commission was " to investigate the question ivhether 
or not t excessive prices are paid to the railroad 
companies for the transportation of the mails . . ." 

Again, in a deliberate and evidently studied re- 
vision of testimony given before the Commission, 
Professor Adams said : 

" I assumed that the purpose of this Commission was to efface 
the deficit in the post-office administration. ... In view- 
ing this entire matter, I came to the conclusion that §3,000,000 

^The italics are the present writer's, 
t The italics are the author' s. 



THE POSTAL DEFICIT. 95 

was the limit that could reasonably be asked from railways. 
. . . Starting, then, with the necessary saving in the rail- 
way mail compensation of $3,000,000, in order to achieve the 
end which I had supposed this commission had placed before 
itself, ..." 

Ill spite, however, of this unfortunate misunder- 
standing of the purposes of Congress and of the 
Commission, Professor Adams' work has thrown ma- 
terial Ught upon the conditions of the Railway Mail 
Service, and has resulted in the complete refutation 
of every claim upon which the reduction of railway 
mail pay was formerly urged. He has forever set at 
rest the allegations that the railways receive forty 
cents per ton per mile ; that there has been no reduc- 
tion in mail pay ; that the average haul of mail is 
328 miles,* and that postal cars rent for more per 
annum than their original cost. 

The statistics compiled under Professor Adams' 
direction are of vital importance, and throw light 
upon the Railway Mail Service which makes possible 
a more complete and satisfactory knowledge of its 
operations than was previously attainable. They 
were compiled with unmistakable sincerity of pur- 
pose, and it is only fair to add that the misconcep- 
tion of the purposes of the investigation that has 
been referred to was not permitted to affect the 
methods used. It will be necessary, however, to pre- 
sent some criticisms of the statistical methods em- 
ployed in the investigation, which make the results 

* Or 813 miles. Tiie same individual at different times used 
each distance as the basis of an argument, and both arguments 
were urged with equal vehemence. 



96 THE POSTAL DEFICIT. 

of the present law appear less favorable to the Gov- 
ernment than would be the case if they were more 
accurately portrayed. 

The most significant contribution to the data con- 
cerning railway mail services and pay made by Pro- 
fessor Adams is, beyond all question, the tabulation 
of the information contained in the records of the 
Post-office Department in such a manner as to estab- 
lish the amount of transportation of mail annually 
performed by the railways, expressed in the familiar 
ton-mile unit. Unfortunately the method adopted 
was such as considerably to impair the value of the 
results. The latter show the transportation which is 
made the basis of compensation, but by no means show 
the actual quantity performed. Professor Adams did 
not overlook this defect, but appears either to have 
underrated it or to have been unwilling to resort to 
the simple expedient necessary approximately to 
eliminate it. His explanation of the method em- 
ployed follows : 

"It is the practice of the Department to weigh the mail on 
each route in each district for thirty consecutive working days 
once in four years, and to accept this weighing as the basis of 
payment for the four years following. According to the law, the 
basis of payment is ' average weight of mails per day carried 
over whole length of route.' . . . This being the case, the 
aggregate ton-mileage of mail carried over the railways of the 
United States may be determined by computing the ton- mileage 
by routes and aggregating the results. This was done for each 
year subsequent to 1873. . . . " 

Continuing, Professor Adams called attention to 
the defect of this method as follows : 

" Under this method of procedure it is of course evident that 
the ton- mileage of mail in the United States for any particular 



THE POSTAL DEFICIT. 



97 



year cannot rest upon the weighings of the year named. It 
represents rather the amount of mail in one of the four districts 
for the year under investigation, to which is added the amount 
of mail determined by the weighings of the three years previous, 
respectively, in tiie three other weighing districts. For ex- 
ample, the ton-:mileage statistics of mail presented in this report 
for 1898 would be the sum of the weighings for 1898 in district 
4 ; for 1897 in district 1 ; for 1896 in district 2 ; for 1895 in 
district 3." 

Before presenting a more technical criticism, it is 
necessary to call attention to a formal error in the 
foregoing extract. Its author does not state cor- 
rectly the method which he used, but assumes that 
he has brought the statistics of ton-mileage a full 
3^ear nearer to the actual weighings in each district 
than is actually the case. There was a weighing in 
the fourth weighing district in 1898, but its results 
were not used by Prafessor Adams in determining 
the ton-mileage of that year. The ton-mileage given 
in the report for the year 1898 was made up as fol- 
lows : 



Weighing district. 


Year of 

weighing 

used. 


Ton- mileage. 


No. 1 


1897 
]896 
1895 
1894 


73,227,667 
90,622,588 
47,620,441 
61,243,321 


No. 2 

No. 3 


No. 4 




Total 


272,714,017 







The total used for 1898 does not, therefore, con- 
tain a single unit representing mail weighed during 
that year. It is perfectly true that the result repre- 



98 THE POSTAL DEFICIT. 

sents the aggregate of the ton-mileage that is the 
basis of compensation, but it is obviously far short of 
the amount carried, and vet it will be accepted, if 
accepted at all, as being an approximation of the 
latter, and will become, as Professor Adams has 
already made it, the basis of calculations as to the 
average receipts per ton carried. 

Under the method adopted, the result of each 
weighing in each district, expressed in ton-miles, is 
used for four successive years, beginning with the 
year after the one in which it took place, as an ele- 
ment in calculating the total number of ton-miles, 
and this calculation consists merely of adding the 
separate items. This method involves the assump- 
tion that the ton-mileage in every district remains 
constant for four years and then moves forward with 
a sudden increment, only to remain stationary for 
another quadrennial period. Of course no one be- 
lieves this to be true ; yet, unless it is the case, the 
ton-mileage given by Professor Adams is invariably 
too small and the average rates per ton per mile in- 
variably too high. The following statement shows 
how great has been the difference in the ton-mileage 
resulting from successive weighings in district 1. 
It can be taken as a type of the entire country, and 
will show how serious an error must result from 
neglecting to consider interquadrennial increases : 



THE POSTAL DEFICIT. 



99 



DISTRICT NUAIBER ONE. 

Ton-mileage. 



Year of weighing. 


Amount. 


Increase over preced- 
ing weighing. 




Amount. 


Per cent. 


1 869 ... 


6,513,655 
13,737,677 
15,851,752 
23,316,828 
30,155,323 
43,993,235 
66,819,535 
73,227,667 






1873 


7,224,022 
2,114,075 
7,465,076 
6,838,495 
13,837,912 
22,826,300 
6,408,132 


110.91 


1877 


15.39 


1881 


47.09 


1885 


29.33 


1889 


45.89 


1893 


51 89 


1897 


9.59 







Although extreme irregularity is an especially 
noticeable feature of the foregoing statement, it can- 
not be doubted that the quadrennial increases were 
in each case distributed throughout the periods be- 
tween the weighings. Professor Adams ignored this 
fact — at least in practice — and declared in regard to 
the results secured by his methods that — 

"This is as close as it is possible to arrive at the quantity of 
mail carried in any particular year in the United States." 

This was certainly a mistaken conclusion, for, with- 
out claiming that the increases were distributed 
evenly over the interquadrennial periods, it is safe 
to assert that their arbitrary distribution in that 
manner must result in closer approximations of the 
truth than entirely to ignore the fact of their actual 
distribution. This is a simple expedient, one easily 

LofC. 



100 



THE POSTAL DEFICIT. 



understood, and by no means imposes an arduous 
task upon the statistician. The following presents 
a comparison of the results of the method suggested 
and of that employed by Professor Adams in rela- 
tion to the first weighing district and for the period 
from 1889 to 1898, inclusive : 





Professor Adams' 
method. 


The correct method. 


ge f 
in ton- 
by cor- 
thod. 


Year. 


Weigh- 
ing year 
used. 


Ton-mile- 
age. 


Source of figures 
used. 


Ton-mile- 
age. 


Porconta 
increase 
mileage 
rect me 


1889 


1885 
1889 
1889 
1889 
1889 
1893 
1893 
1893 
1893 
1897 


.30,155,323 
43,99.3,2.35 
43,993,235 
43,993,235 
43,993,235 
66,819,.535 
66,819,.535 
66.819,535 
66,819,535 
73,227,667 


Actual weighing 

Estimate 


43,993,235 
49,699,810 
55,406,385 
61,112,960 
66,819,535 
68,421,568 
70,023,601 
71,6-25,6.34 
73,227,667 
74,429,191 


45.89 


1890 


12.97 


1891 


Estimate 


25 94 


1892 


Estimate 


38.91 


1893 


Actual weighing 


51.89 


1894 


2.40 


1895 


Estimate 


4 80 


1896 


Estimate 


7 19 


1897 


Actual weighing 

Estimate 


9.59 


1898 


1 64 









In explanation of the column that has been indi- 
cated as showing the correct method, it should be 
said that the weighings have been supposed to show 
the actual tonnage of the year in which they are 
taken instead of the year following. It is true that 
they are not made the basis of payment until the 
year after that in which they are taken, but that is 
no reason for adding to this injustice, if it may be 
so called, the denial of the fact that the service per- 
formed is greater than that paid for. In estimating 
for the years subsequent to the latest weighing the 
extremely conservative rule has been adopted of 
assuming the continuance of an annual increase, but 



THE POSTAL DEFICIT. 



101 



fixing the amount at but three-fourths of that of the 
previous quadrennial period. Considering the com- 
mercial conditions of the last five or six years, it is 
evident that this materially understates the services 
actually performed, but it was considered better to err 
upon the side of caution. 

A correct statement of the actual ton-mileage of 
the country would be secured by making a series of 
estimates such as that in the foregoing table for each 
weighing district and combining the results for each 
year. In order further to indicate the importance of 
this criticism and to show the efi'ect of the use of the 
wrong method, the following comparisons, relating 
to the whole country, are introduced : 





Ton-mileage. 


Eate per ton per mile 
in cents. 


Year. 


Professor 
Adams' 
method. 


The correct 
method. 


Professor 
Adams' 
method. 


The correct 
method. 


1873 

1878 

1883 

1888 

1893 

1898 


24,687,923 

39,755,061 

72,444,857 

112,830,405 

203,195,521 

272,714,017 


34,986,496 

52,624,560 

92,551,975 

152,815,777 

244,757,219 

295,520,353* 


26.420 
23.167 
17.828 
16.268 
13.973 
12.567 


18.646 
17.502 
13.955 
12.012 
11.601 
11.598* 



* The extremely conservative rule adopted in estimating j^ears subse- 
quent to the latest weighings unquestionably makes the ton-mileage of 
1898 too low and the average rate too high. As the estimates for the earlier 
years are more accurate, this results in an apparently small decline during 
the later years. 



102 THE POSTAL DEFICIT. 

This defect in the method of determining ton- 
mileage of mail affects nearly all of his most impor- 
tant tables, and especially those which show average 
rates per ton per mile or attempt to compare the in- 
crease in passenger and freight traffic with that in 
mail traffic. It should be borne in mind and suit- 
able allowance made for it whenever conclusions 
based upon it are used. The uncorrected data have 
been used in this paper because the error which they 
contain is invariably prejudicial to the conclusions 
in regard to railway mail pay that have approved 
themselves to the present writer, and for the reason 
also that it has not been considered desirable to an- 
ticipate a discussion of the statistical methods by 
w^hich they were obtained. 

Before considering the principles governing mail 
pay, as presented by Professor Adams, it is advisable 
to examine some of his minor conclusions concerning 
the conditions of railway mail transportation. 

One of these is that the expense of speed is greatly 
overestimated. Possibly the following quotation 
somewhat overstates Professor Adams' contention, 
but it has been selected with a view to presenting it 
as clearly as possible in his exact words. Whatever 
qualification was intended must here, as in his re- 
port, be read between the lines or supplied by the 
reader. He said : 

" In the same way that the rapid worker can produce a quan- 
tity of goods at lovver cost than the slow worker, so a speedy 
train can render a service more cheaply than a slow train. The 
operating expenses which increase with increased speed are 
relatively small when compared with those upon which a sav- 
ing is made by speed. . . . The correctness of this view 



THE POSTAL DEFICIT. 103 

must be acknowledged when it is recognized that the burden of 
speed to the railways does not arise so much from the increase 
of the cost of a fast train over a slow train, all elements of cost 
being taken into account, as from the decrease of the load 
rendered necessary by the increase of speed. . . . The 
economic speed for any train is a resultant arising from balanc- 
ing the saving of expense occasioned by high speed against the 
saving of revenue occasioned by low speed." 

Of course, Professor Adams is not ignorant of the 
fact that train employes are almost always paid per 
mile run and not per hour or day of definite dura- 
tion, though he appears from the foregoing to have 
temporarily overlooked it. He is also in complete dis- 
agreement with all practical railway men in regard 
to the effect of speed upon cost. This is not a question 
that the statistician can determine with his ordinary 
tools, and in the present state of knowledge it is better 
left to those whose duties have given them practical 
acquaintance with the subject. Such a man is Mr. 
Frederick A. Delano, superintendent of motive power 
of the Chicago, Burlington and Quincy railroad, who 
appeared before the Joint Postal Commission on June 
26, 1900. It is proper to add that his testimony was 
not available when Professor Adams made his report. 
This testimony contains unmistakable evidence of 
the careful and continued study given to the question, 
and should be examined thoroughly by any one who 
wishes to be fully conversant with this phase of the 
subject. Only the briefest extract can be given, and 
that will scarcely represent the conclusions with ac- 
curacy, for it cannot indicate the care taken to qualify 
them and explain their essential limitations. The 
following gives Mr. Delano's language : 



104 THE POSTAL DEFICIT. 

*' I should say, taking all the factors into consideration, that 
the cost increases fully half again more rapidly than the speed. 
For example, I mean by that that if the speed was doubled the 
cost would be trebled." 

The importance of this disagreement between the 
author of the report and practical railway men lies 
in the fact that mail is given to the fastest trains 
available, and that the direct cost is therefore affected 
by whatever conditions determine the relation be- 
tween the direct expenses incurred, respectively, for 
fast and slow trains. 

Another calculation in the report that can scarcely 
be sustained is expressed in the following extract : 

"If, however, one analyzes the operating expenses of rail- 
ways, he finds a considerable part of the items to whicli this 
expense does not pertain. Thus 'station expenses,' 'station 
supplies,' ' advertising agencies,' and a large number of other 
expenses do not pertain to the traffic handled for the most part 
by the employes of an outside agency. Probably .$100,000,000 
out of the grand total of $800,000,000 ' operating expenses ' 
should be excluded when considering the cost of the mail serv- 
ice." 

It is obvious to remark that as an offset to the op- 
erating expenses that are in no way contributory to 
the mail service there are other expenses, perhaps not 
separately stated in the reports to the Interstate 
Commerce Commission, which relate exclusively to 
that service. The maintenance of cranes and catch- 
ers, messenger service in connection with the rule 
requiring railways to take and deliver mail when 
the post-offices are within one-quarter of a mile of 
their stations, may be especially mentioned. Re- 
gardless of this offset, however, the statement is not 
correct. Of the three expenses referred to by Profes- 



THE POSTAL DEFICIT. 105 

sor Adams, " advertising " alone has no relation to the 
mail service. Those who recall the explanation of 
what the railways do for the Government in connec- 
tion with the postal service are already aware that 
station services are by no means an unimportant fac- 
tor. This has been shown by extracts from the 
Postal Laws and Regulations, and the statement ap- 
plies to station supplies, including stationery, as well 
as to other station expenses. 

The statement given by Professor Adams, which 
purports to show the distance at which " profit on 
transportation turns into loss " for the different 
classes of mail when carried by rail, is also inaccurate 
and misleading. It is of comparatively slight im- 
portance, but should be corrected. It is based pri- 
marily on the assumptions that the Government 
pays to the railways thirty-five per cent of the earn- 
ings on each class of mail transported by rail, and 
that each piece of mail carried is of the maximum 
weight allowed for the amount of postage paid. 
Thus the Government charges two cents for one 
ounce of sealed first-class matter, which is at the rate 
of $640 per ton, regardless of distance. Thirty-five 
per cent of $640 is $224, and this divided by 12.567 
cents, the average rate per ton per mile ascertained 
by Professor Adams, gives 1,782 miles as the maxi- 
mum distance which a piece of first-class mail can 
be carried without a greater cost to the Government, 
for transportation, than thirty-five per cent of the 
amount received. Professor Adams gives this as the 
distance at which profit turns into loss. Both of the 
8 



106 



THE POSTAL DEFICIT. 



assumptions are, however, inaccurate. The postage 
actually received on each class of mail matter is 
given by the Department in the annual report for 
1899, and in each case varies materially from the 
rate calculated by assuming that each piece of mail 
is of maximum weight. Thus the receipts for first- 
class matter average 85.6 cents per pound instead of 
32 cents. Again, while the Department does pay ap- 
proximately 35 per cent of its receipts to the railways, 
it must be borne in mind that the mail carried by rail 
is the more profitable porkon. Probably, in spite of 
the losses incurred on second-class matter, the deficit 
would be wiped out if the postal service could be con- 
fined to points reached by railways. This, however, 
would not be desirable. Xo correction for the latter 
error is attempted in the following table, in which 
figures based on the actual receipts for each class are 
put by the side of those gi^'en in the report by Pro- 
fessor Adams : 

Distance at which proi:t turns to loss on the assumption that 
65 per cent of earnings are required for other expenses than 
those incurred for railwav service. 



For first-class mail 

For second-class mail 

For third-class mail 

For fourth-class mail (ordinary) . 
For fourth- class (seeds, etc.) .'. . . 

For foreign mail 

For postal cards 



As given by 

Professor 
Adams. 



1,782 miles 

56 " 

446 " 

891 " 



The coiTect 
figures. 



4,768 miles 

45 " 

819 " 

947 " 

512 " 

2,562 '* 

10,483 " 



THE POSTAL DEFICIT. 107 

The concluding three items were not estimated by 
Professor Adams, but are added to make the state- 
ment complete. The average rate per ton per mile 
for mail calculated by Professor Adams is also used, 
though it makes the distances too short. 

The next condition stated in the report, which re 
quires discussion, relates to the variation in the 
volume of mail from day to day and month to month. 
Professor Adams appears to think that an argument 
in favor of low rates can be predicated upon the as- 
sumption that mail moves with substantial regu- 
larity. In the testimony given by him in New York 
on November 23, 1899, he said : 

"Among the considerations favorable to the argument that 
railway mail compensation might with propriety be reduced 
are the following : This traffic is sure traffic to the railways ; it 
is steady traffic, and while it may be true that a heavier weight 
of mail passes west than passes east, .... it does not vary 
from month to month as^does the passenger traffic. It is dis- 
tributed with a fair degree of equality." 

The present writer knows of no evidence substan- 
tiating the foregoing in more than the most general 
sense, and there is a great deal of testimony, some of 
which has already been summarized in describing 
railway services, that indicates that it may not be 
correct. Superintendent Bradley says that the daily 
variation in mail leaving New York city amounts 
to 60 per cent. It is not possible to do more at the 
present time than to suggest that the assumption 
that mail traffic does not fluctuate materially re- 
quires demonstration before it can properly be made 
the basis of action. 



108 [the postal deficit. 

There are two portions of Professor Adams' report 
which, although relativel}^ inconspicuous in treat- 
ment and comparatively insignificant in length, espe- 
cially attract the student, because they appear to be 
deliberate attempts to determine what would con- 
stitute reasonable railway pay, or at least, with par- 
ticular reference to the one first to be considered, 
the minimum limits of such pay, by inductive 
methods. As such they diff'er materially from all 
other portions of the report. The following extract 
from the report will serve as an introduction to the 
discussion of one of these attempts and at the same 
time indicate the importance attached to it : 

" The question whether or not railways are overpaid under 
the law of 1873 is reducible to the question whether or not the 
Pennsylvania raih'oad, the New York Central, the Chicago, 
Burlington, and Quincy railroad, and the Union Pacific rail- 
road are overpaid for the service which they render." 

The calculation proposed is as follows : 

" The two most important mail routes in the country are the 
Philadelphia and New York route, over the Pennsylvania rail- 
road, and the New York and Buffalo route, over the line of the 
New York Central railroad. The former has an average daily 
weight of 309,000 pounds per mile of line, which, for ease of 
calculation, will be called 150 tons per mile per day. Confining 
attention for the moment to the Pennsylvania route, it appears 
that this route receives an annual compensation of $3,422 per 
mile of line, a condition which presents the following question : 
Can the Pennsylvania road afibrd to carry 150 tons of mail daily 
between New York and Philadelphia for less than §3,422 an- 
nually per mile of line, or §93.75* per mile of line per day? 

"The answer to the above question depends entirely upon 
the manner in which the freight is moved. According to Mr. 
Bradley, Superintendent of Railway Mail Service of this divis- 
ion, mail goes upon 140 trains daily, 26 of which, however, 
perform 90 per cent of the service. This is important informa- 

*An obvious error. The amount should read $9,372^. 



THE POSTAL DEFICIT. 109 

tion, for it indicates tliat the car unit and train unit are a safe 
basis of calculation upon this route. The averagje loading of 
the post-office car, according to the testimony before the Com- 
mission, is 2 tons. It must be admitted, in view of the great 
weight of these cars, tliat such loading pays little regard to the 
requirements of economy. It is doubtful if, on the basis of such 
loading, the railways could afford to carry mail at a rate much 
cheaper than it is now carried. On the other hand, if cars were 
loaded with 3h tons, which Mr. Davis says is an 'easy load,' or 
should the average load go as high as 6 tons, which, according 
to testimony, is accomplished on the Pennsylvania railroad by 
its special juail train, I am confident that railways operate upon 
a marginal profit in carrying mail that warrants a reduction in 
pay. The calculation upon which the above conclusion rests is 
as follows: At 2 tons per car 150 tons of mail would demand 
that 75 cars be passed over each mile of the Philadelphia and 
New York route per da^^ This would be the equivalent of 8 
trains per day run at passenger speed. 

" The av^erage cost per train mile, all operating expenses being 
taken into account, is slightly under $1. As stated above, it is 
assumed to be $1. This would make $8 per mile per day charge- 
able to operating expenses, which increased by 33 per cent 
for fixed charges and dividends, improvements chargeable to 
incomes, investments, and the like, would give $10.40 per mile 
per day properly chargeable to mail service. This multiplied 
by 365 (this multiplier ought to be decreased in the proportion 
that Sunday service is less than week-day service) would give 
$3,796 per mile per year as the cost of mail service. This amount 
is an excess of the amount which the route actually received. 
If, however, the basis of the estimate be modified, and if it be 
assumed that each car is loaded with 3j tons, as stated in the 
testimony of the superintendent, a similar computation shows 
that the road would expend for its mail service an annual sum 
per mile of line of $2,244, which is considerably less than the 
amount received per mile of line on this route." 

The foregoing will be discussed independently of 
the questions concerning the average loading of postal 
cars which it naturally raises, because that subject 
would require rather extended comment and relates 
quite as closely to the examination of the specific re- 
ductions proposed by Professor Adams, which will 
constitute a more important part of this work and 
will be taken up hereafter. One qualification of the 



110 THE POSTAL DEFICIT. 

foregoing introduced in the report should be quoted. 
It is as follows : 

"The above calculations are submitted in part as an emphatic 
expression of the fact that one must know every detail under 
which traffic is carried on dense routes before he can judge 
whether the present compensation is or is not overpayment." 

Professor Adams also asserts that the calculation 
quoted — 

"is the same sort of calculation that a railway- manager would 
adopt if called upon to face the question whether a specific 
charge for a specific service should be yet further reduced or the 
service abandoned." 

It is submitted that in the foregoing C[Uotation 
Professor Adams has fallen into the error against 
which he warns the Commission and others when he 
declares on page 223 that the " bane of statistics is 
the mathematical ayerage." In the first place, he has 
used an average which, while it agrees substantially 
with that given for all trains in the United States, 
freight as well as passenger, and also for the group 
in which the New York-Philadelphia route is located, 
is considerably lower than that which his own report, 
rendered as statistician to the Interstate Commerce 
Commission, applies to the Pennsylvania railroad. 
The average for the United States (figures for 1898 
are used, as that is the year used by Professor Adams) 
is 95.635 cents, and for the group in question 94.985 
cents, but for the Pennsylvania railroad the average 
is $1.12842. Merely allowing for this difference 
would change Professor Adams' conclusion on the 
basis of 2 tons from |3,796 to $4,294, and that on 
the basis of 3J tons per car from §2,244 to §2,539 as 



THE POSTAL DEFICIT. Ill 

the cost to the Pennsylvania railroad per mile per 
day.* But this would be merely to repeat, albeit on 
a slightly safer basis, the misuse of a mathematical 
average, and could be only misleading. It is intro- 
duced solely to show one of the inherent dangers of 
such a calculation. The average cost per mile of 
$1.12842 for the Pennsylvania railroad represents 
all trains, both passenger and freight ; it represents 
the results of operating the Pennsylvania Limited 
as Avell as local freight trains ; it represents results 
on the lines that have four tracks and block-signal- 
ing apparatus, 100-pound rails, and miles of elevated 
city tracks, as well as those of the least expensively 
equipped branches. The mail is carried on the most 
expensive trains, and the route in question is over 
what is probably the most expensive stretch of track 
of its length, not only of the Pennsylvania rail- 
road, but in the United States. Is it reasonable, in 
the face of these facts, to suppose that the average 
operating cost per train mile is no higher for the 
New York-Philadelphia route than for the Pennsyl- 
vania railroad as a whole ? Professor Adams urges 

* Professor Adams' calculation also contains a mathematical 
error that would seriously impair its value even had it been based 
on sound premises. He adds 33 per cent of operating expenses 
as an allowance for fixed charges. This error is evidently due 
to the fact that total railway expenditures are distributed in 
about the relation of 67 and 33 between operating expenses 
and fixed charges, respectively. However, 33 is nearly 50 per 
cent of 67, and though fixed charges are about 33 per cent of 
total expenditures, they are approximately 50 per cent of oper- 
ating expenses. Allowance for this as well as for the error just 
discussed would raise the estimate, on the basis of two tons per 
car, from $3,796 to $4,831 and that on the basis of three and 
one-half tons from $2,244 toJ2,856. 



112 THE POSTAL DEFICIT. 

that it costs no more per mile to operate a passenger 
train than to run a freight train, but this, by no 
means, meets the difficulty. If the average passen- 
ger train cost per mile were ascertained with abso- 
lute definiteness (a thing in itself impossible) for the 
Pennsylvania railroad, it would still be unwise and 
misleading to attempt to use it for such a calcula- 
tion. If any railroad officer does use such an aver- 
age in the manner indicated, as is claimed, he merely 
deceives himself and those who depend upon his 
judgment. It will not be out of place to add that 
the demand for facilities for prompt and rapid dis- 
patch of mail has so affected the New York-Phila- 
delphia route that the number of pounds of mail 
carried per single trip was but 3,099 in 1897, against 
3,367 in 1881. The rate per ton per mile, as given 
by General Shallenberger, was 6.4 cents in 1881, and 
the earnings per single trip |9.70, while in 1897 the 
average rate was 5.8 cents, and the earnings per 
single trip $8.15, or 15.98 per cent less than sixteen 
years earlier. 

The next attempt makes use of the comparative 
method by placing the average mail rates of certain 
routes in juxtaposition with the tates charged for 
particular quantities of express and of first-class 
freight when shipped from one of the termini of the 
same route to the other. This comparison is intro- 
duced with the remark : 

"As corroborative evidence of the impression that railway- 
mail compensation upon dense routes constitutes overpayment 
to the railways, the following statement is introduced. . . ." 



THE POSTAL DEFICIT. 



113 



And it is followed b}^ the observation that — 

" The data in the above table, properly interpreted, support 
the impression tbatrailwa)' mail rates are relatively higher than 
freight rates or express rates, and that this excess payment ex- 
tends not only to the dense routes, but to all routes." 

It is clear from the foregoing extracts that Pro- 
fessor Adams assigns to the table in question (table P, 
pp. 237, 238, of the report) a position of material 
i mportance in the argument upon which the reduc- 
tions in mail pay which he proposes are based. The 
table includes a large number of points, of which six 
of the first seven are shown below, one being omitted 
because the data are not complete in the report : 



From New York to— 



Buffalo 

Chicago 

Union Pacific Transfer 

Ogden 

San Francisco 

Philadelphia 



Per ton of 2,000 pounds. 



Mail Freight Express 



$31.65 
71.39 
107.67 
192.85 
265.63 
6.57 



$7.80 
15.00 
29.40 
75.40 
60.00 
4.40 



$12.50 

25.00 

45.00 

105.00 

135.00 

7.50 



Per hundredweight. 



Mail Freight Express 



fl.58 
'3.57 
5.38 
9.64 

13.28 
.33 



$0.39 

.75 

1.47 

3.77 

3.00 

.22 



$0.63 
1.25 
2.25 
5.25 
6.75 



The foregoing has been slightly rearranged in 
order to save space, but the substance of the table, 
as presented by Professor Adams, is unaltered. It 
will be observed that the rates are given for two 
units of weight, those per hundredweight being the 
quotient of those per ton divided by twenty. Under 
these circumstances the discussion need be applied 
to but the last three columns. It is obvious that if 
the rates in the table are accurate and comparable 
the payment for mail service exceeds the payment for 



114 THE POSTAL DEFICIT. 

first-class freight on each of the routes indicated, and 
exceeds that for express on five of the six routes given. 
This inference is supported by Professor Adams' com- 
ments upon the table. It merits, however, a somewhat 
closer examination. The average rates given for mail 
represent the entire mail traffic overthe routes in ques- 
tion. The shipments of mail, as was shown when 
the methods of weighing mail were considered, are 
among all of the stations along the several routes, 
and the estimated weight carried over the whole 
route is obtained by reducing the traffic of inter- 
mediate points to its equivalent in pounds carried 
over the whole route ; thus the payment, though 
based upon an estimated weight carried between 
termini, is not for a service exclusively between such 
points, but for one which involves the receipt and 
delivery of mail at each intermediate station as well 
as at the termini. For example, the route between 
Xew York and Buffalo, on which the rate of Sl.oS 
per 100 pounds of mail is c[uoted by Professor 
Adams, has 133 post-offices and points of exchange. 
The average 100 pounds of mail to which the 
rate as quoted is applied is made up of many 
separate pieces, some of which must be presumed 
to have been received and others to have been 
delivered at each post-office and point of exchange. 
The actual number of pieces in an average 100 
pounds of first-class mail is probably more than 
4,000. On the other hand, the shipment of first- 
class freight, with which Professor Adams has com- 
pared this complex of mail shipments, is an actual 



THE POSTAL DEFICIT. 115 

single shipment from one consignor to one consignee, 
traversing the entire distance from New York to Buf- 
falo in an uninterrupted journey. The New York 
Central and Hudson River railroad, which is the 
line over which the New York and Buffalo mail is 
routed, receives relatively higher rates on shipments 
from New York to intermediate stations than on 
those to Buffalo, as well as on traffic wholly between 
intermediate stations and from the latter to Buffalo. 
It also receives relatively higher rates on shipments 
of less than 100 pounds, but these are probably few. 
To obtain a satisfactory comparison between first- 
class freight rates and mail rates on the New York 
to Buffalo route it would be necessary to take the 
freight rates between every possible combination of 
stations, including the termini, on the route, to reduce 
the traffic taken at each rate to its equivalent in a com- 
mon unit of weight carried the whole length of the 
route, and then secure a weighted average in which 
each rate should be given representation proportionate 
to the quantity of transportation to which it is applied. 
The task is a considerable one, but, with the co-opera- 
tion of the officers of the railway, by no means an 
impossible one. However, no one, with the possible 
exception of Mr. Acker, is now likely to propose 
freight rates as a proper measure of reasonable mail 
rates. The comparison just discussed, though ob- 
noxious to sound and logical statistical principles, is 
not likely seriously to mislead any one. This cannot 
be said of the comparison with express payments, 
which is contained in the same table. In a later 



116 THE POSTAL DEFICIT. 

portion of this work it will be shown that the serv- 
ice performed for the Post-office Department is so 
different from that performed for the express com- 
panies that comparisons between the paj^ments for 
each are of a very limited value. This objection 
will be passed over at the present time, and only 
the misleading character of the comparison pre- 
sented by Professor Adams will be discussed. Every- 
thing which has been said in regard to the funda- 
mental error of comparing the average rate obtained 
from a complex of mail shipments, only a portion 
of which traversed the whole length of a route, 
with freight rates for traffic traversing the entire 
distance should be understood as applying with su- 
perior force to an effort to compare the same average 
with express payments for through shipments. In 
the case of the comparison with express payments 
there is the added error, equal if not greater than 
the first, of basing the comparison on shipments of 
100-pound packages of express. The express pay- 
ments used by Professor Adams were obtained by 
taking the express rate on 100-pound packages and 
assuming that half of each rate is paid to the railway 
for the services performed in behalf of the express 
company. The basis of 50 per cent for this purpose 
was obtained by adding to 40 per cent, which is the 
basis of some contracts, an arbitrary of 10 per cent 
more as an allowance for the services performed for 
the railways and the payments directly to railway em- 
ployes. The evidence shows, however, that express 
contracts call for cash payments of from 40 to 55 per 



THE POSTAL DEFICIT. 117 

cent of gross express earnings, and frequently include 
minimum guarantees in addition. There is also 
some contention that the allowance for services per- 
formed is too low. Assuming, however, that 50 per 
cent is the actual proportion of gross express reve- 
nue that is paid to the railways, it should be remem- 
bered that it is a percentage of gross revenue and not 
of the revenue on any particular shipment. Express 
business is essentially a small package business, and 
much of it is between points located within short dis- 
tances of each other. The railway gets all of the 
business along a particular line and is willing to carry 
the large and low-rate packages along with the small 
and high-rate packages, because the average payment 
resulting from all of the business is satisfactory. It is 
certainly unreasonable to suppose that it would ac- 
cept on all express traffic the smallest amount which 
is added to its revenue from this source by the least 
remunerative kind of business that the express com- 
pany conducts. Yet this is exactly the assumption 
that Professor Adams has made. He admits that the 
selection of average express rates would have resulted 
in raising the rates above those shown. The rates on 
100-pound packages are absolutely the lowest known 
to the express companies, yet so few packages of that 
weight are received that it scarcely affects the average 
returns. Eleven car-loads of express leaving New 
York in one night over the same route traversed by 
New York to Buffalo mail contained only nineteen 
packages which weighed as much as 100 pounds. Mr. 
Julier, the General Manager of the American Express 



118 



THE POSTAL- DEFICIT. 



Company, certainly a competent authority, regards a 
typical package as one weighing 7 pounds. The same 
authority has furnished the actual average payment 
made by the express company to the railways on cer- 
tain of the routes selected by Professor Adams. If a 
comparison of mail routes with express payments, 
based on weight carried, has any value at all, it should 
be made with such averages. The following table 
shows comparisons for a few selected points between 
the data used by Professor Adams and those furnished 
by Mr. Julier : 





To- 


Express payments 
per 100 pounds. 


From — 


As given by 
Professor 
Adams. 


Is 

si 


New York 


BuflPalo 


$0.63 

1.25 

2.25 

.30 

2.13 

.75 

.63 


§1 16 


New York 


Chicago 


2 592 


New York 


Omaha 


4 89 


Chicago 


Milwaukee 


.404 


Chicago . 


New Orleans 

St. Louis 


3.165 


Cincinnati 


1.31 


Cincinnati 


Cleveland 


.92 









The foregoing shows that in some cases the data 
used by Professor Adams were less than half of the 
correct amounts, while the closest approximation by 
any one of them was too low by more than 30 per 
cent. Without claiming that it throws any veiy im- 
portant light upon the present reasonableness of rail- 



THE POSTAL DEFICIT. 



119 



way mail pay, but merely for the purpose of substi- 
tuting a correct comparison for an incorrect one, the 
following table is introduced : 



From— 


1 
To— 


Average payments per 
100 pounds for railway- 
services in the transpor- 
tation of — 




Mail. 


Express. 


New York 

New York 


Buffalo 

Chicago 


$1.58 
3.57 
5.38 
3.27 
2.49 
4.38 
1.33 
.34 
1.83 
5.27 
1.31 
1.20 
1.61 
1.20 
1.26 


$1.16 
2.592 


New York 

New York 

New York 

New York 

New York 

Chicago.. 

Chicago 

Ch icago 


Omaha 

Indianapolis. . . 

Columbus 

East Saint Louis. 
Portland, Maine.. 

Milwaukee 

Minneapolis 

New Orleans 

Detroit 


4.89 
2.57 
2.06 
3.50 
1.22 

.404 
2.00 
3.165 


Chicago 


.75 


Chicago 


Cincinnati 

Saint Louis 

Chicago 


1.07 


Cincinnati 

Cincinnati 


1.31 
1.07 


Cincinnati 


Cleveland 


.92 



In the foregoing the same arbitrary allowance for 
express services rendered gratuitously to railways 
which was proposed and used by Professor Adams 
is used. 

FUNDAMENTAL PRINCIPLES. 

Professor Adams discusses the principles which 
should govern the determination of railway mail 



120 THE POSTAL DEFICIT. 

pay under three heads which may be repeated. They 
are : 

1. The principle of compensation. 

2. The principle of public utility. 

3. The principle that density of traffic enables 
economies. 

He finds that the principle of compensation is ap- 
plied to the Railway Mail Service in accordance with 
the system of jurisprudence which came to this coun- 
try from England, but that it must be applied subject 
to. certain practical limitations which grow out of the 
nature of the railway business. The principle of com- 
pensation can successfully be applied only in so far 
as cost can be either directly or indirectly ascertained. 
Accounting and statistical methods are not equal to 
the task of distributing the cost of furnishing rail- 
way transportation among the various services per- 
formed by railways, and therefore the direct appli- 
cation of the principle of compensation is limited to 
the total return for all of the services performed by 
a particular railway. This argument approves itself 
to all careful students of the economic aspects of rail- 
way transportation. If any objection is to be entered 
it will have to be that that portion which relates to 
the distribution of cost of operation is not expressed 
as strongly as is desirable. Such distribution is not 
merely impracticable. The particular cost of a spe- 
cific service is not merely not ascertainable ; there is 
no such particular cost. Railway services are pro- 
duced at joint expense, as copper and silver when 



THE POSTAL DEFICIT. 121 

both appear in the same ore, as mutton and wool 
produced from the same animal. No one would 
propose to divide the food of a sheep and say that so 
much was fed to produce wool and so much to pro- 
duce meat, yet such an effort would be no more 
absurd than to attempt to divide the coal expendi- 
ture of a locomotive between passengers, mail, and 
express. 

THE PRINCIPLE OF PUBLIC UTILITY. 

The "principle of public utility "is introduced 
with the words : 

" It is true that pay to railways for transporting mails should 
be brought under the principle of compensation, but compen- 
sation tempered by the principle of public utility." 

In reality the principle of public utility may be 
regarded as a corollary of the principle which de- 
clares that the idea of compensation for the trans- 
portation services performed by railways is limited 
in its application to the aggregate of those services 
and to the total sum received therefor. There being- 
no specific cost assignable to particular services, it 
follows that the adjustment of the charges as between 
different services would have to be attained in a 
purely arbitrary manner unless the principle of com- 
pensation could be supplemented by another that 
would more directly affect particular rates. The 
principle of public utility satisfies this requirement. 
Properly understood, it means nothing more than 
that the public interest in the results of railway 



122 THE POSTAL DEFICIT. 

transportation should be recognized in the adjust- 
ment of the charges for the different services per- 
formed. The public is under an obligation to those 
who have furnished railway facihties which requires 
that the total revenue collected as payment for rail- 
way services shall be permitted to be sufficient in 
amount to pay operating expenses and a reasonable 
return to invested capital. On the other hand, the 
public has the right to insist that in raising such 
revenue the amounts assessed against particular 
services shall bear those relations to each other which 
will best serve the general welfare. This principle 
does not involve any conflict between the owners of 
railway propert}^ and the shipping and traveling 
public. The interest of the former in the develop- 
ment of the resources of the regions contiguous and 
tributary to their lines is coincident with that of the 
public in the general development of industry, and 
both tend to secure the same result through the utili- 
zation of a common means — the relatively reason- 
able adjustment of transportation charges. It is to 
be observed also that the principle of public utility 
will never require the transportation of any traffic 
for less than the cost directly incurred in moving it, 
but is only applicable to the distribution among the 
several services of those expenses which are jointly 
incurred. 

No student of transportation will object to Professor 
Adams' general statement of the principle of public 
utility. The idea which is expressed, has been ap- 
plied in railway practice ever since rate-making be- 



THE POSTAL DEFICIT. 128 

came at all systematized, and in one form or another 
has long been familiar to railway men. To state a 
principle correctly and to apply it with precision 
are, however, two very different things, and Professor 
Adams' application of the principle to the problem 
of railway mail pay fails to commend itself, as does 
the statement which he has formulated. The man- 
ner in which this application is attempted will be 
shown by a series of quotations : 

"The principle of public utility suggests the point of view 
from wliich to regard the transportation of mail. It being ad- 
mitted that carrying the mails is a transportation service for 
which compensation must be allowed, where in the schedule of 
services rendered by railways should the transportation of mail 
be classed ? . . . the transportation of mail should be 
classed among those services which minister to the develop- 
ment of the process of production rather than to the satisfac- 
tion of wants through the transportation of the products. Of 
all things transported by rail intelligence is the most essential 
to social and economic advantage, and on this account is in the 
highest degree amenable to considerations of public utility. 
. . . The application of the principle of public utility classi- 
fies mail transportation with freight ; it classifies it among the 
fundamental or social services of railways." 

The following quotation will explain why, in Pro- 
fessor Adams' opinion, the principle of public utility 
classifies mail traffic in the manner indicated by the 
foregoing : 

" A railway manager is willing, for example, to carry coal at 
a very low rate, even at the risk of incurring loss, because he 
knows that coal is potential industrial development, and that 
what he loses on the coal traffic becomes for him a gain on the 
transportation of high-class freight, the product of the mills 
and factories which the distribution of coal renders possible. 
The railway manager adjusts his charges upon coal with a 
view to the development of industry in the territory contribu- 
ting freight to his railway ratlier than according to the cost of 
transporting coal. 



124 THE POSTAL DEFICIT. 

"The same line of reasoning is pertinent, even in a higher 
degree, to the transmission of intelligence, because the means 
of diffusing intelligence is an essential condition of growth and 
development. As the distribution of coal, which is latent man- 
ufacturing power, is essential to the upbuilding of manufac- 
tories, so the diffusion of intelligence is a fundamental condition 
of all social and industrial evolution.'' 

The conclusion from, the line of reasoning indi- 
cated in the quotations already given is as follows : 

" . . . Government 'has the right to insist that the 
transportation of mail is an essential social function ; that it is 
imperative, not alone to the present advantage of the public, 
but to the liealthful and permanent development of the State. 
It has the right openly, publicly, and without apology to put 
in practice, in the interest of the public at large, a rule uni- 
versally acknowledged by railway men in the development of 
their property. . . . The application of the principle of 
public utility . . . justifies an unusually low rate upon 
mail transportation, provided this is essential to rendering the 
important service undertaken hy the Postal Department, and pro- 
vided that hy this adjustment the gross revenue to railways is not so 
far depressed as to deprive investors of property.'^ 

The concluding clause of the foregoing has been 
italicized by the present writer in order to emphasize 
a modification introduced in this paragraph since 
Professor Adams first appeared before the Commis- 
sion. The change is probably in the direction of 
accurate statement, but the original language will 
serve to throw light upon the meaning of the last 
proviso. The sentence was originally phrased ex- 
actly as quoted, except that instead of the portion in 
italics the following appeared : 

" Provided that the railways are permitted to recoup them- 
selves by higher rates from other relatively less important serv- 
ices." 

The idea of recoupment from less important 
services appears to be quite prominent in Professor 



THE POSTAL DEFICIT. 125 

Adams' view. When he appeared before the Com- 
mission for farther examination, after having sub- 
mitted his report, he said : 

"In the consideration of the theory of the nature of trans- 
portation, they have the right to reduce the railway mail pay 
below cost and recoup on freight if the public utility is served 
thereby." 

When revising his testimony, however, he substi- 
tuted for the foregoing the following : 

" When one considers the peculiar nature of the business of 
transportation and the intimate relation which it holds to the 
lives and interests of all people, it certainly seems to me right 
to say that the rate charged for any particular service may be 
below the cost of that service, even though it is necessary for 
the railway to recoup itself by a relatively higher charge upon 
another service, provided public utility is thereby served. In 
saying this, however, it should be remembered that the pros- 
perity of railways is to be included within the survey of public 
utility." 

The later statement means substantially the same 
as the earlier, unless it is believed that the return to 
investors in railway property is now excessive, though 
the language adopted in the revision is probably less 
likely to arouse antagonism to a reduction in mail 
rates. One more quotation will clearly present Pro- 
fessor Adams' point of view. In his formal report he 
said : 

" Of course, considerations of public utility might keep the 
rate on one class of traffic high, notwithstanding an increase in 
its volume, but in the case of mail traffic this consideration 
would work in quite the opposite direction on account of the 
fact that mail traffic is of all classes of traffic the most essential 
to social and industrial growth." 

Briefly summarized, the consideration of the ap- 
plication of the principle of public utility to the Rail- 



126 THE POSTAL DEFICIT. 

Avay Mail Service, as indicated by the quotations given, 
establishes, according to Professor Adams, the follow- 
ing: 

1. Mail traffic is of the highest social importance. 

2. Mail traffic is entitled to the lowest rates, provided these 
are necessary to adequate service. 

3. Railways are entitled to a reasonable gross revenue which 
means adequate compensation for the aggregate of services per- 
formed. 

4. Very low rates in one kind of traffic, e. g. mail, should be 
oflset by relatively high rates on other traffic. 

The fundamental fallacy in the application of 
the principle to the case in hand, however, is that 
Professor Adams has utterl}^ neglected to consider 
whether the lowest rates or lower rates than those 
now paid are " essential to rendering the important 
service undertaken by the Postal Department." This 
goes directly to the heart of the question at issue. 
The theory of public utility has no favorite services 
to which it contributes gratuities. Correctly applied, 
it will secure from each service rendered by the rail- 
ways the highest amounts which can be paid with- 
out preventing the transportation of any traffic which, 
from the viewpoint of the economic interests of so- 
ciety at large, it is desirable to have moved. These 
will, at the same time, be the lowest rates which the 
railways can afford to charge. The inquiry which 
is properly made in aid of the application of this 
principle, when the reasonableness of any rate is 
questioned, is whether the rate is so high as to for- 
bid the socially desirable transportation. If the rate 
is so high as to prevent such transportation or so low 
as to encourage socially undesirable transportation, 



THE POSTAL DEFICIT. 127 

it is opposed to the general welfare, and consequently 
obnoxious to the principle of public utility. It 
should be understood also that this inquiry will not 
be adequately answered in any case until it has been 
learned whether the transportation alleged to be de- 
sirable is iimpeded by anything outside of the 
rate charged and natural economic conditions. If 
there are any uneconomic and removable restraints 
the interests of society in general, as well as the 
rights of the public carriers, demand that they be 
eliminated before a reduction is required. The 
question is, therefore, neither complex nor very diffi- 
cult in practical application when addressed to the 
mail service. This is the form it should take at the 
present time : 

1. Does the Postal Department adequately serve 
the public? 

2. If it does not, is the difficulty due to high rail- 
way charges or can it be attributed to extravagant 
organization or to other causes? 

It is quite possible that a careful examination of 
the facts that would appear in reference to the first 
inquiry would show that there is superfluous mail 
transportation, and that those appearing in answer 
to the second, should it still be asked, would demon- 
strate that more efficient organization, more rea- 
sonable salaries, and properly adjusted charges 
would quickly result in the elimination of the 
present deficit and the substitution of a considerable 
surplus. 



128 THE POSTAL DEFICIT. 

If, however, it should be admitted, as it is assumed 
by Professor Adams, without even the most perfunc- 
tory discussion, that the present railway mail pay is 
an impediment to an adequate postal service, it would 
still be necessary, according to the principles that he 
has announced, to establish one of three things be- 
fore a reduction could be considered proper. It would 
have to be shown either : 

1. That the aggregate railway revenue is excessive ; 

• 2. That there are certain charges which can be 
raised to compensate for those lowered ; or, 

3. That the reduced rates would so increase busi- 
ness as to produce greater revenue. 

In the case of mail business the third possibility 
is so improbable as scarcely to merit discussion. 
Professor Adams gave no attention to either point, 
though there is ample evidence that the theoretical 
necessity w^as not unrecognized by him. A few quota- 
tions from his report will show that, in theory at 
least, he appreciated the necessity of considering the 
entire schedule of railway charges in connection with 
the problem of mail pay. He said : 

"The principle of public utility enables the problem of 
railway mail pay to be treated as an integral part of the gen- 
eral scheme of railway rates. Congress may properly consider 
the amount given to railways for transporting the mail as one 
of the many sources from which the carriers draw their reve- 
nue, and, holding in mind the social value of the service as 
compared with the other services rendered by railways, can 
arrive at some conclusion as to the relative amount that ought 
to be allowed for this service. ... To cut this analysis 
short, the position of this report is that the private interest 
in railway charges is limited to the claim that the gross rev- 



THE POSTAL DEFICIT. 129 

enne of railways should be adequate to cover operating ex- 
penses, fixed charges, and a fair return to stockholders ; but 
this sum having been guaranteed, tne manner in which this 
gross amount is collected from the shippers is a matter of public 
policy and not of private interest." 

The foregoing is so clearly expressed and so cath- 
olic in sentiment that it is a matter of deep regret 
and almost supreme surprise to find its author delib- 
erately discussing the reduction of one rate upon 
alleged grounds of public utility without either pre- 
senting eyidence that the lower rates would better 
serye the general welfare, considering the relation of 
the present income to total operating cost and capital 
inyested, or offering any suggestions as to means of 
offsetting the reductions which he proposes. It is a 
curious "guarantee" of a "fair return" which per- 
mits the reduction of single rates without any refer- 
ence to the general schedule. On another page of 
his report Professor Adams recognizes the necessity 
of considering the results of the entire schedule in 
the most explicit terms, as follows : 

"It is believed that no headway can be made toward a solu- 
tion of the problem of reasonable railway mail compensation 
so long as mail traffic and railway mail revenue is considered 
independently of general traffic and general revenue." 

The reyised text of Professor Adams' latest ex- 
amination shows, howeyer, that he finally begged 
the entire question in the following answer to a 
question by Mr. Loud : 

" Your questions have brought out the important fact that 
the adjustment of railway mail compensation is intimately con- 
nected with the adjustment of railway schedules as a whole, 
and that the rule of compensation cannot be applied to any 



130 THE POSTAL DEFICIT. 

particular service considered by itself. Further questions in 
this direction would necessitate a general discussion of the 
theory of railway rates, and whatever one might say upon so 
comprehensive a question in an examination of this sort would 
probably be either platitudes or statements which on their face 
would be absurd. I should prefer, except the Commission see 
some bearing of these questions other than that which has al- 
ready been brought out, to refrain from expressing myself upon 
so fundamental a problem as the problem of railway rates." 

Apparently, it is impossible to reconcile the state- 
ment with which the foregoing begins with the effort 
to avoid the discussion to which it naturally pointed 
Avith which it closes. Until the hiatus in the dis- 
cussion of railway mail compensation from the point 
of view of public utility is supplied by a careful 
examination of the question thus indicated, that 
principle will be of little aid in the determination of 
reasonable rates. 



THE PRINCIPLE THAT DENSITY OF TRAFFIC ENABLES 



There are certain industries, in which the propor- 
tion of fixed capital is large, which can enlarge their 
output without a corresponding increase in their out- 
lay. Such industries are said to conform to the 
economic law of increasing returns, which means that 
the cost of production per unit of product is lower 
with the enlarged output than when the quantity 
produced was less. President Hadley, of Yale Uni- 
versity, has contributed a most useful suggestion in 
this connection by calling attention to the fact, in a 
footnote to one of the pages of his " Economics," that 
the real distinction between industries in this respect 



THE POSTAL DEFICIT. 131 

is based on the extent of the utilization of the exist- 
ing fixed capital. Railways constitute one of the 
most ready examples of industries which conform to 
the law of increasing returns. The outlay required 
for road-bed, stations, signaling apparatus, etc., does 
not multiply nearly as rapidly as traffic. It is easy, 
however, to overstate the effect of this law, and much 
harm has been accomplished by so doing. A rail- 
way may be in such a situation that an increase in 
certain kinds of traffic requiring especial facilities or 
service will actually raise the average cost of render- 
ing such services. Professor Adams expresses his 
interpretation of the law of increasing returns as 
applied to railway transportation in what he terms — 

. . . " the business law of transportation, a law which 
asserts that the cost per unit of transportation decreases as the 
density of traffic increases, . . . this law is that operat- 
ing expenses do not grow Droportionally with an increase in 
traffic." 

Again, it is desirable to introduce a series of quota- 
tions in order that Professor Adams' application of 
the law of increasing returns, or, as he has called it, 
the " principle that density of traffic enables econ- 
omies," to the problem of railway mail pay may be 
fully apprehended. 

The first quotation will be from the preliminary 
statement made to the Commission by Professor 
Adams several months before his report was ren- 
dered. He said at that time : 

*' The possibility of introducing economies into the business 
of transportation depends upon the increase in the volume of 
traffic, from which, in the absence of countervailing consider- 



132 THE POSTAL DEFICIT. 

ations, it follows that a form of traffic which increases most 
rapidly through a series of years should show a relatively more 
rapid decrease in charges as compared with other traffic!" 

The following are from the final report : 

" The significance of the increase in the volume of traffic is 
that it enables an introduction of economies and a consequent 
decrease in the cost of rendering the service." 

"The conclusion from this law was that the traffic which 
contributes most to an increase in density ought, other things 
being equal, to show the greatest reduction in rates." 

" If there be any virtue in the rule that economy of transpor- 
tation depends upon density of traffic, it is evident that mail 
traffic ought to show a greater relative saving than either 
freight traffic or passenger traffic." 

In another place, in the same report, after introduc- 
ing a statement which shows the relative increases 
since 1881 in mail, passenger, and freight transpor- 
tation. Professor Adams says : 

" The statement justifies the general reduction in rates dur- 
ing the past eighteen years, for it shows such a reduction to 
have been possible on account of the economies introduced in 
the business of transportation. It also justifies, in the absence 
of countervailing consideration, a much greater relative reduc- 
tion of mail rates than of passenger or freight rates." 

No one who gives even the most cursory attention 
to the foregoing will fail to appreciate the fact that 
the possibility of introducing economies as traffic 
increases is the essential element in the law. If there 
is no such possibility, if traffic at the beginning of 
the period under observation had reached the point 
at which the highest practicable economy can be 
attained, no conceivable increase in density could 
operate so as to produce a presumption in favor of 
lower rates. That the important place in the theory 
here assigned to the coexistence of potential econo- 



THE POSTAL DEFICIT. 133 

mies with increasing traffic is a fair statement of 
Professor Adams' position will be made more evi- 
dent by the following extract from his report : 

" Whether or not this great increase in ton-mileage warrants 
the increase in pay from $6,522,725 to $34,273,431 depends 
entirely upon the degree of economy that may be introduced 
into the service on account of this increased density of traffic." 

Yet, in spite of the paramount importance of this 
aspect of the development of railway mail service, 
according to the theory which he advocates, Pro- 
fessor Adams' report will be searched in vain for any 
evidence that the great increase in ton-mileage of 
mail w^hich has taken place has been accompanied 
by even the smallest economies in its transportation. 
If such economies have been effected it should be 
possible to point out when and w^here they occurred. 
In freight transportation one can explain the fact 
that railways can carry traffic at from five mills to 
one cent per ton per mile and remain solvent by 
reference to larger cars, more powerful locomotives^ 
increased tonnage per train, and other very salient 
improvements. What similarly money-saving im- 
provements have been applied to the transportation 
of mail? It. is submitted that they have not been 
pointed out, and that they will not be pointed out. 
They do not exist. On the contrary, the whole 
history of the railway mail service since the intro- 
duction of postal and compartment cars shows pro- 
gressively greater demands upon the railways for 
facilities. The data now available, which it must be 
admitted are in many respects far from satisfactory^ 



134 THE POSTAL DEFICIT. 

indicate, not onl^y that the point where increasing 
traffic ceases to " enable economies" was reached on 
most railways several decades ago, but that, under 
the current demands of the Post-office Department, 
the normal increase in traffic does not affect com- 
pensation sufficiently to keep the latter in perma- 
nent relation with the development of more costly 
methods. Professor Adams himself suggests an inci- 
dent of the law of increasing returns that may warn 
the thoughtful that the limits of economy may have 
been reached at a comparatively early date in the 
development of mail transportation by rail. He 
declares : 

" The above does not complete this fandamental law of trans- 
portation. Not only does increase in the volume of traffic tend 
to reduce relative cost, but the effect of increased traffic in re- 
ducing cost is relatively more intense for a road whose traffic is 
sparse than for a road whose traffic is dense." 

The foregoing is in accord with the true theory of 
the relation of the returns of industry to the capital 
and labor employed — that is, that all industries pass 
or may pass through successive states in which they 
conform, first, to the law of increasing returns ; sec- 
ond, to the law of constant returns, and, third, to the 
law of decreasing returns. The fact of conformity to 
these laws is a technical one, and is dependent upon 
the degree of development attained in the particular 
industry considered. The regularity of the succes- 
sion can be interrupted by the development of new 
methods. For example, agriculture, which is usually 
regarded as the best example of an industry subject 



THE POSTAL DEFICIT. 135 

to decreasing returns, may be brought into temporary 
conformity with the law of increasing returns by the 
adoption of intensive methods. Unless the methods 
of a particular industry are so modified as practically 
to substitute a new one, as in the substitution of the 
factory system for that of household industry in tex- 
tile manufactures, the states of conformity to any rule, 
except that of diminishing returns, must be consid- 
ered as temporary. This statement requires the qual- 
ification, however, that some industries may supply 
the entire effective demand while remaining in the 
earlier states, and that the incentive to development 
beyond those states may thus be lacking. Such in- 
dustries may appear to be continuously subject to the 
law of increasing returns. 

The purpose of this digression into economic theory 
is to throw light upon the passage last quoted. It 
clearly contemplates just such a progress as has been 
described, for if it be true that " the effect of increased 
traffic is relatively more intense for a road whose traffic 
is sparse than for a road whose traffic is dense," it 
follows that the decrease in intensity may proceed to 
the point where it is zero, and that beyond that point 
it would become negative — that is, increase of traffic 
might proceed until it required extra facilities to an 
extent that would increase the quotient of expense 
divided by volume. This may be regarded as ex- 
tremely unlikely to result from any probable in- 
crease in any kind of railway traffic, but long before 
it could happen the economy from increasing traffic 
would be negligible. This " fundamental law of 



136 THE POSTAL DEFICIT. 

transportation " is, therefore, a temporary law, apply- 
ing only under certain conditions and subject to very 
definite limitations. There is evidence that it has 
very little effect upon passenger traffic at the present 
time, if the railways of the United States are consid- 
ered as a single system, though it still applies with 
considerable force in freight transportation. Profes- 
sor Adams has not shown that it still applies to mail 
transportation, and when the effect of constantly in- 
creasing requirements, of methods substantially rev- 
olutionized within three decades, is added, there is 
reasonable ground for refusing to believe that it 
does. 

It has been asserted that Professor Adams has 
made no effort to show that increasing mail traffic 
has been accompanied by economies. In order that 
there may be no misunderstanding it should be 
added that the fact that he has made occasional allu- 
sion to higher average car-loads of mail on certain 
routes than in the country at large has not been 
overlooked. Examination will show, however, that 
these allusions were invariably introduced in order 
to throw light upon the relative situation of different 
routes, and that there was no effort to show that 
these averages are higher now than in the past. 
Throughout the entire discussion Professor Adams 
depended wholly upon the assumption that there 
must have been economies, because ton-mileage had 
increased. That this j^ortion of his argument is 
wholly dependent upon the existence of such a pre- 
sumption was acknowledged in the following words 



THE POSTAL DEFICIT. 137 

which are quoted from his revised testimony of 
April 7, 1900 : 

• "... it may be added that the railway representatives 
do not appear adequately to appreciate the significance of the 
tremendous increase in mail traffic since 1870. Many of them 
assert, by implication at least, that we have come to a point in 
the development of mail traffic when it is impossible to further 
decreasie cost as the result of increase in mail traffic. This im- 
plication is at least questionable ; indeed, it must be conceded 
that if this be a correct statement of the case the entire argu- 
ment of my report is incorrect." 

REDUCTIONS RECOMMENDED BY PROFESSOR ADAMS. 

At the commencement of this examination of the 
report rendered by Professor Adams to the Joint Postal 
Commission allusion was made to certain internal 
evidences that he did not approach the investigation 
in a spirit of complete open-mindedness, but had pre- 
judged the case, or at least his relation to it, so far as 
to believe that it was his duty to find a means of re- 
ducing railway pay. It is not surprising that while 
in this attitude of mind, and after reaching the con- 
clusions concerning the application to railway mail 
pay of certain so.uiid and generally recognized eco- 
nomic principles, conclusions that it has been neces- 
sary in this paper to criticise adversely, he should 
have found in the prosperity which has come to the 
railway industry in common with all other indus- 
tries of the country an additional justification for 
the reduction of mail pay. He presented this idea 
to the Commission as follows : 

"It is absolutely certain, in view of the current earnings of 
railways and of the large increase in the sums contributed to 

10 



138 THE POSTAL DEFICIT. 

gross earnings in payment for passenger services and freight 
services, that a moderate decrease in the amount contributed 
by the Government for transporting mail would have no in- 
jurious effect upon the value of railway property 
the Government is justified in presenting "its claim to a participa- 
tion in the benefits conferred upon the railways by a return of 
prosperity. . . . The only form the benefit can take is 
that of a reduction in the rate of pay." 

It is noticeable that the idea of recoupment from 
less important services is not present in the forego- 
ing extract. In fact it suggests, while of course it 
does not parallel, the easy nonchalance with which 
Mr. Acker turned aside an inquiry as to the effect of 
his proposed reduction of 25 per cent of present 
mail pay. 

Mr. Acker said : 

*' In answering that question I will simply remind you that 
the percentage which the postal revenues figure in the rail- 
road revenue — I think it is about 3 per cent — is so small that a 
change of 25 per cent could hardly affect either the freight rates 
or passenger rates of any road that I have any knowledge of. 
The item would be too small to cut any figure."" 

In spite of the preconceived idea that it was his 
duty to report in favor of a reduction that would, in 
effect, constitute a material " contribution " from the 
railways toward the elimination of the current postal 
deficit, Professor Adams has given evidence that his 
confidence in the propriety of his recommendations 
is not complete. While before the Joint Postal Com- 
mission, on April 7, 1900, some time after the presen- 
tation of his report, he admitted that there was an 
apparent inconsistency in his conclusions, though he 
tried to show that it was not real. At that time he 
said to the Commission : 



THE POSTAL DEFICIT. 139 

"Still, there is an apparent inconsistency there in recom- 
mending a reduction and in recommending a further investiga- 
tion, because my recommendation does include all routes. I am 
perfectly willing, if the Commission thinks clearly to adopt 
either dilemma, to bringing this report to a conclusion, to drop 
from my report the recommendation of reduction of pay and 
retain the recommendation for further investigation." 

The foregoing was entirely omitted from the re- 
vised testimony ; but, as both the original and the 
revision have been published by the Government, it 
is still available, and, with the discussion which ac- 
companied it, continues to throw light upon the rec- 
ommendations which it was finally decided to in- 
clude. 

The reductions recommended include a horizontal 
reduction of 5 per cent to be applied to all routes 
and certain specific reductions, upon a graduated 
scale, to be applied, in addition, to the routes already 
receiving the lower rates of compensation. Professor 
Adams' report contains exactly forty-three words 
in regard to the 5 per cent horizontal reduction, 
which, if adopted, would have the effect of reducing 
the present compensation by about one and three- 
quarters millions of dollars. Only twenty of these 
w^ords are in the body of the report and are as fol- 
lows : 

" First. It is proposed that the present rate of compensation 
on all routes shall be reduced by 5 per cent." 

There w^as no further allusion to the proposed 
horizontal reduction in the report as originally sub- 
mitted, but after the examination of April 7, 1900, 
in which this recommendation was discussed in such 



140 THE POSTAL DEFICIT. 

a way as to bring out its absolute independence of the 
processes of reasoning concerning mail pay embodied 
in the report, a footnote of twenty-three words was 
added, which reads as follows : 

_'* This suggestion is justified by a consideration of the econo- 
mies in railway transportation not dependent on increase in 
the density of mail traffic." 

It will be observed that if these forty- three words 
shall be accepted at their face value by the Joint 
Postal Commission and by Congress, they will cost 
the railways something more than forty thousand 
dollars apiece. That is rather higher than the usual 
rate of payment for contributions to statistical and 
economic literature. 

That so important a proposition should have been 
so lightly treated is scarcely explicable, and in order 
that there may be no doubt concerning the matter 
or suspicion of oversight, the following frank admis- 
sion from Professor Adams' revision of his testimony 
of April 7, 1900, is quoted : 

"I must confess that the report is incomplete at this point. 
It contains no explanation of the reasons for advocating a hori- 
zontal reduction of 5 per cent in addition to the differential 
reduction on the dense routes." 

On April 7, 1900, Professor Adams declared, in ex- 
planation of the fact that the recommendation of a 
5 per cent reduction had been applied to all routes, 
while he had previously limited his conclusions in 
regard to overpayment to routes carrying 30,000 
pounds and upward per day, that — 

*' The justification of it is that you get such a very large per- 
centage of your mail over 30,000 pounds." 



THE POSTAL DEFICIT. 141 

The foregoing disappeared during the revision of 
this testimony and the following appeared in its 
stead : 

" The justification of the horizontal reduction — that is to say, 
a reduction which affects all routes under all conditions and in 
all parts of the country — is found in the fact that the railways 
of the country during the last quarter of a century have been 
benefited by improved methods of manufacture and changes in 
the price of equipment and supplies quite independently of the 
economies introduced as the result of increased traffic. . • 
In order that the Government might secure advantage from 
this form of economy I recommended a horizontal reduction 
upon all routes." 

If this "justification" had not been formulated 
after the recommendation to which it was applied, 
which is palpably the case, as the report bears date 
as of February 1, 1900, while the explanation finally 
given was clearly not in the mind of its author as 
late as April 7, 1900, the fact that it is in radical 
contradiction to the balance of his argument and 
proposals could not have escaped his attention. He 
has expressly stated that — 

"The law of 1873 is drawn in harmony with the fundamental 
law of transportation, namely, that volume of traffic renders 
economy possible. . . . This consideration is recognized 
. . . by specific reductions in the rate of payment." . . . 

and that there is a — 

" constant reduction no matter how large the quantity of mail 
carried." 

He has also specifically shown that under the law 
the average mail payment per ton per mile has been 
reduced from 26.420 cents in 1898 to 12.567 cents in 
1898. It is submitted that this reduction secures to 



142 THE POSTAL DEFICIT. 

the Government all of its due proportion of the bene- 
fits derived by the railways from " improved methods 
of manufacture and changes in the price of equip- 
ment and supplies." 

An additional quotation from the examination of 
April 7, 1900, which was also omitted in the revision, 
will nearly complete the evidence in regard to the 
easy independence of logical foundation which char- 
acterized the introduction of this recommendation. 
The following is from page 418 of Part II of the 
published testimony : 

"Professor Adams: I have not investigated the effect of a 5 
per cent reduction upon the small routes — those that receive in 
excess of 60 cents per ton per mile. 

" Mr. Loud: And, as a matter of fact, it might all be eaten 
up by mail messenger service, might it not ? 

" Professor Adams : Possibly ; yes, sir. I have not investi- 
gated that." 

The specific reductions proposed by Professor 
Adams are contained in the following extract from 
his report: 

" Second. It is proposed that all routes receiving in excess of 
20 cents per ton per mile shall be subjected to a further reduc- 
tion at a uniformly progressing rate, the rate of progression 
being indicated in the following table : 



THE POSTAL DEFICIT. 



143 



SCHEME FOR PROGRESSIVE REDUCTION OF RAILWAY MAIL PAY. 



Classification of roads on the basis of rates received 
under the present laws by which railway com- 
pensation is determined (cents per ton per mile). 



Percentage 
of reduc- 
tion a p - 
plying to 
each class 
of roads 
in a d d i - 
tion to a 
uniform 
reduction 
of 5 per 
cent. 



16.50 to 20... 
14 to 16.50... 
12.30 to 14... 
11.25 to 12.30 
10 to 11. 25... 
9.20 to 10.. . 
8.80 to 9.20.. 
8.40 to 8.80.. 
8.10 to 8.40.. 
7.67 to 8.10... 
7.34 to 7.67... 
7 to 7.34 



Per cent. 
1 
2 

3 
4 
5 

6 



9 
30 
U 
12 



The foregoing was substituted for a differential 
scale of reduction which was proposed to the Com- 
mission by Professor Adams on November 23, 1899. 
The earlier proposal included routes receiving up to 
sixty cents per ton per mile, while, as will be seen, 
the later specific reductions apply to routes receiving 
not more than twenty cents per ton per mile. As the 
earlier proposal involved a reduction of about ten 
per cent, and the later about half as much, the pos- 
sibility that Professor Adams' confidence in the 



144 THE POSTAL DEFICIT. 

applicability of the " principle that density of traffic 
enables economies " to railway mail service decreased 
50 per cent between the end of Xovember and the 
beginning of February is naturally suggested. 

These specific reductions are wholly dependent 
upon the princijDle just referred to, and as its limita- 
tions have already been discussed, and the lack of 
any evidence that the economies suggested have ac- 
tually taken place has already been made apparent, 
little further comment is required. Possibly Profes- 
sor Adams' own appreciation of the fact that this 
recommendation is absolutely dependent upon the 
existence of economies with regard to which he intro- 
duced no evidence can yet be made clearer. In his 
preliminary statement at New York he said : 

'' My' point is this: Unless the Post-office Department can 
avail itself of a dense traffic of 150 tons per mile per da}-, to 
introduce economies in the dispatch of mail be3'^ond what is 
indicated by an average load of 2 tons of mail per car, I do not 
see how Congress can justly reduce the rate." 

Four and one-half months later, after submitting 
his report, he said : 

" You must understand that this report is written from the 
point of view of the testimonj'- that has been given here, and 
conscious of the fact that the argument against reduction would 
be rested upon the fact that the average load in a postal car is 
only 2 tons— if it is only 2 tons — and if you cannot make it 
more than 2 tons, then the overpay, if there is overpay, lies on 
those routes where, as a matter of fact, they do have an excess 
of 2 tons ; but I was disinclined to accept what the Post-office 
Department seems to accept, and many of the witnesses assert 
that it is impossible to load cars beyond an average of 2 tons. 
Now, I may be wrong there. . .' . Two is what the evi- 
dence asserts. Now, I may be wrong there; but my recom- 
mendation for reduction is that in case we do have 3^ or 4 or 5, 
if those routes exist, that they are getting too high pay now, 
and therefore you could now, under existing law, at present 
reduce the rate." 



THE POSTAL DEFICIT. 145 

At the later hearing the following questions and 
answers were given : 

"Mr. Loud: Still, subsequent investigation might entirely 
change your conclusions — that is, such is possible, is it not? 

" Professor Adams : Yes, sir: I admit that. I admit that if 
it be proved that it is not possible to introduce any greater 
economies in the Railway Mail Service than now exist, my 
conclusions are false. 

" Mr. Catchings: All of them? 

" Professor Adams : My chief conclusion as to reduction of 
pay." 



FURTHER IXVESTIGATION RECOMMENDED BY PRO- 
FESSOR ADAMS. 

Study of the recommendations in regard to railway 
mail compensation has shown that they were based 
upon assumptions which cannot be admitted, on 
principles erroneously applied, and upon allegations 
of fact with regard to which their author admits 
that there is no proof. Though introducing these 
recommendations for reductions, it has been shown 
that Professor Adams at one time offered to with- 
draw them, and it will now appear that he accom- 
panied them by recommendations for further inves- 
tigation that completely nullify any force they might 
otherwise have retained. 

Professor Adams suggested five heads of inquiry 
for further investigation, and the very first of these 
throws such doubt upon the proposal for reductions 
upon the denser routes that it would have to be held 
in abeyance pending investigation were there no 
other reason for refusing to accept it. This sugges- 
tion begins by asking for : 



146 THE POSTAL DEFICIT. 

" Such a classification and compilation relative to trains carry- 
ing mail that the persistent error which lurks in the phrases 
* average load ' and ' average number of cars in train ' can be 
set aside. 

and it ends with this significant fundamental admis- 
sion: 

"It must be admitted that the proposed reduction of com- 
pensation submitted by this report rests, in part, upon an as- 
sumed ' average load ' respecting which there is no absolute 
certainty." 

Two other suggestions indicate that Professor 
Adams did not entirely overlook the fact that before 
insisting upon reductions in railway mail pay upon 
the ground of " public utility " the Post-office Depart- 
ment must be purged of extravagant methods. 
These recommendations will also be quoted in full: 

" Such a description of postal-train service in selected dis- 
tricts as to warrant a conclusion respecting extravagance or 
economy of the railway-mail service. 

" Such an investigation into the methods of appointment, ten- 
ure of office, and rate of payment of postmasters and post-office 
employes as will disclose the fact of extravagance outside of 
the Railway Mail Service if such extravagance exist." 

All of the data indicated by these suggestions are 
important, and their collection would materially aid 
in determining how the postal service can be im- 
proved. They might also show whether the deficit 
can be eliminated without resorting to means that 
would either operate unjustly toward a portion of 
the public or materially impair the public utihty of 
the services rendered by the Department. 



THE POSTAL DEFICIT. 147 



GENERAL REVIEW OF PROFESSOR ADAMS REPORT. 

Summarizing what has already been observed con- 
cerning Professor Adams' report and testimony as 
expert to the Joint Postal Commission, it must be 
said that it has been found to be vitiated by the bias 
with VN'liich he undertook and pursued the work. In 
spite, therefore, of his unquestionably great ability, 
his long experience as a statistician, and his high 
reputation as an economist, he has not very mate- 
rially advanced the solution of the present problem. 
The data which he collected have sufficed to estab- 
lish, with much greater definiteness than was for- 
merly the case, some of the paramount conditions of 
the Railway Mail Service, but even in this respect his 
work has not risen to the height of its possibilities. 
The comparisons in which he attempted to throw 
light upon the relation of mail pay to freight rates 
and express pay were among incomparable data and 
so misleading as to be worse than valueless. The 
other attempt to investigate, inductively, the reason- 
ableness of present mail rates will find* its highest 
utility as an illustration of the baneful and deceptive 
possibilities of the mathematical average. 

Passing to the general principles announced, it has 
been shown that, although usually sound in his 
broader generalizations, the attempts to apply them 
to the present problem were often fundamentally 
erroneous. The principle that density of traffic en- 
ables economies, which the present writer has pre- 



148 THE POSTAL DEFICIT. 

ferred to designate in accordance with ordinary 
economic terminology as the law of increasing re- 
turns, was overstated at the outset, and yet if che 
statement should be fully accepted no demonstration 
of its aj)plicability to the present situation would ap- 
pear. 

In conclusion, it was found that one recommenda- 
tion calling for a deduction from railway earnings of 
about §1,750,000 was made without the formality of 
presenting any reasons, and that the only ''justifica- 
tion " ever suggested by its author was an after- 
thought, brought forward in consequence of adverse 
criticism, more than two months after the report was 
rendered. The other recommendation favoring ad- 
ditional differential reductions was in accordance 
with the supposed law of density, the applicability 
of which had not been shown. According to the 
frank admission of its author, it was based upon an 
assumption, with regard to which there is no abso- 
lute certainty, and can be none, until the facts have 
received much further study. Finally, the report 
concluded with a series of suggestions which clearly 
indicate that the facts which are required for a satis- 
factory study of railway mail pay were not, in Pro- 
fessor Adams' opinion, available when he made his 
report. 



THE POSTAL DEFICIT. 149 



SUMMARY. 



The results of the investigation conducted by the 
Joint Postal Commission afford a great deal of addi- 
tional information concerning the conditions of the 
Railway Mail Service. It has been the purpose of 
this paper to arrange some of this information in 
such a way as to indicate as nearly as possible the 
nature of the problems presented. It will be obvious 
to those w^ho have followed the discussion herein 
that the data necessary for a complete description of 
this service are not yet available, and that much 
more in the way of investigation can still be under- 
taken with profit. It will appear, however, if it has 
not already done so, that so far as the data now 
available can point to any conclusion they clearly 
indicate that the present rates of railway mail pay 
are not excessive. This conclusion is believed to 
apply with especial force to those routes on which 
the requirements in regard to compartment and 
postal car service are greatest. 

GENERAL CONCLUSIONS CONCERNING RAILWAY MAIL 

PAY. 

This work has already considered the services 
rendered by railways in mail transportation, and the 
fact that constantly increasing demands for space 
and facilities are made by the Department has been 
established by the most ample and indisputable 
evidence. It has also been shown that the rates 



150 THE POSTAL DEFICIT. , 

charged for these services have steadily declined 
and that the extent of the decrease within the last 
three decades has been much greater than in passen- 
ger rates and but slightly less than in freight rates. 
Where the conlparisons could be applied to particu- 
lar routes the decline in mail rates has been greatest 
of all. In the discussion of Professor Adams' report 
it appeared that if the comparison was made 
between the data for the respective services that 
are most nearly comparable the railway receives 
almost as much per ton per mile for carrying 
traffic for the express companies as for the serv- 
ices rendered in carrying mail. The latter com- 
parison was hardly satisfactory, for w^hile it was 
possible to determine just what the Post-office De- 
partment pays, the special services rendered to the 
railways by the express companies, which plainly 
constitute a part of the payment accorded, had to be 
estimated for, and the allowance was necessarily a 
minimum one. So far as the comparison between 
express and mail pay has any value, it can, therefore, 
be postulated, with perfect safety, that the difference 
is little, if any, and of no especial significance. It is 
difficult, however, to attach any very material im- 
portance to this comparison. The difference between 
the services rendered to the express company and 
those supplied to the Department is fundamental. 
Were the actual rates paid by express companies, in- 
cluding the value of the services which they perform 
for the railway, known, it might be possible to add 
arbitrary amounts for each element of superiority in 



THE POSTAL DEFICIT. 151 

the Railway Mail Service, and thus arrive at an 
amount which could be supported with very plaus- 
ible arguments as constituting reasonable compensa- 
tion for mail transportation. This amount would 
inevitably be much higher than the present payment, 
and while it might happen to approximate a reason- 
able return for the services required, the method is 
an unsound one. 

The limitations of the principle that payments 
shall be adjusted to cost which prevent its applica- 
tion to specific railway services, whether rendered in 
carrying mail or other traffic, have already been fully 
explained. The aggregate cost of all of the trans- 
portation services rendered by railways can be ascer- 
tained, and the public is bound, not only in order 
that justice may be served, but in the interest of 
travelers and shippers, to see that this sum, together 
with a reasonable profit, is returned in payment for 
those services. The railways have no interest in the 
relative adjustment as between different services of 
the payments which make up this aggregate return 
except that which they share with the general 
public. This interest is fully expressed in the state- 
ment that the adjustment must be such as to foster 
equal and symmetrical industrial development and 
thus to promote the general welfare. 

If the foregoing is true the primary observation 
in the consideration of any specific railway charge is 
that it cannot properly be declared to be either just 
or unjust, unless it is studied in connection with the 
general schedule of charges, and unless the entire 



152 THE POSTAL DEFICIT. 

revenue is examined as to its relation to the aggre- 
gate expenses for operation and the amount of capital 
invested. When the investigation of the reason- 
ableness of railway mail pay is approached in this 
manner it will appear at the outset that the current 
adjustment of railway income to railway expenses 
and investments is reasonable. This could probably 
be shown inductively, but the demand upon statis- 
tical science would be a severe one if it were to be 
attempted by its method, and other inductive proof 
must, in this case, be fragmentary, and thus open to 
misinterpretation. The large proportion of railway 
operating expenses paid as wages, the urgent neces- 
sity of maintaining road-bed and equipment in a 
satisfactory physical condition, the large proportion 
of railway securities which receives no return, and 
the very low average rate paid on those securities 
which do receive dividends or interest, all indicate 
that the present total revenue is not too high. If the 
question is considered deductively, however, the con- 
clusion is unmistakable and the process of reasoning 
by which it is reached is simple and satisfactory. The 
large proportion of railway traffic is made up of com- 
modities for which there are numerous sources of sup- 
ply. The railways have to make rates which will en- 
able these products to be sold in competitive markets, 
and this brings each railway into separate alliances 
with the shippers of each locality which it serves. 
These alliances compete sharply among themselves, 
and as there is no known cost of production of spe- 
cific railway services, while any traffic that pays more 



THE POSTAL DEFICIT. 153 

than the direct cost incurred in its behalf is really 
profitable, the railway, as a producer, must accept 
whatever sacrifice in revenue is necessary to protect 
the volume of its traffic. If it did not do so the local 
producers, whose commodities it carries, would be 
forced out of business. In this manner the constant 
adjustment and readjustment of railway revenue to 
a basis that is reasonable to the public is auto- 
matically enforced by commercial forces that are 
more powerful than the efforts of raihvay officers 
and stronger than legislative action.* 

As railway revenue is not in the aggregate excess- 
ive, the theory of public utility, which should prop- 
erly determine the relative adjustment of charges for 
different services, must find some rate that is too low, 
or show that the rate in which a reduction is pro- 
posed does not produce as much net revenue as might 
be secured with a lower rate, in order to declare that 
another is too high. A reduction in the revenue se- 
cured from one kind of service must be balanced by 
an increase in that from another, or the railw^ay busi- 
ness becomes unreasonably unprofitable. This would 
first act injuriously upon railway employes, then 
upon railway patrons, by impairing the quality of 
the services rendered and endangering life and prop- 
erty in transit and limiting facilities ; then upon the 
owners of railway capital, and finally upon the gen- 
eral public, by destroying business stability. 

*For a more complete statement of this law see the present 
writer's article, "Observations Concerning the Theory of Rail- 
way Charges," in the Yale Review of November, 1900. 

11 



154 THE POSTAL DEFICIT. 

This simple question must then be asked : What 
rates should be raised to balance the loss of revenue 
that would obviously result if mail rates were re- 
duced ? It will not do to answer loosely that the re- 
duction may be made up by higher rates on traffic 
that is of less social importance than mail traffic. 
The true application of the principle of public utilit}^ 
involves the performance of all transportation that is 
socially desirable without sacrificing any because of 
its small relative importance. Eates have been ad- 
justed to this basis, with more or less accuracy, ever 
since traffic began to be classified, for the adjustment 
is not dependent upon the conscious acceptance of the 
principle. Nor does the principle of public utility 
require the lowest rates upon traffic of the highest 
social importance. It merely requires rates that will 
insure the transportation, and if such traffic can bear 
higher rates than those imposed on business of lower 
social importance which is charged those necessary 
to secure its movement, it would be unwise and 
socially detrimental not -to enforce them. There is 
no evidence that mail transportation or postal de- 
velopment is hampered by the present scale of rates ; 
there is no adequate evidence that any class of traffic 
moves too abundantly on account of too low rates. 
The conclusion from this anal3^sis is that the strict 
application of the principle of public utility to the 
present charges for carrying mail indicates very 
plainly that the railways are not overpaid. 



THE POSTAL DEFICIT, 155 



GENERAL CONCLUSIONS. 



At tlie outset of this work it was suggested that 
many different means for eliminating the postal 
deficit might be found. As it is being completed the 
daily papers contain evidence that the deficit is not 
unlikely entirely to disappear as the result of con- 
tinued prosperity and the natural increase of postal 
business under current methods and at current rates. 
This evidence is found in the synopsis of the forth- 
coming annual report of the Postmaster General, 
which appeared in the morning papers of Decem- 
ber 10, 1900. This shows that the deficit for the 
fiscaFyear which ended with June 30, 1900, was but 
$5,385,688, or less than half that of 1897 and more 
than three and one-half million dollars less than in 
1898. The Postmaster General has estimated the 
deficit of 1901 as $4,634,307. 

The rapidly decreasing difference between postal 
receipts and expenditures, together with the proba- 
bility that a small deficit is the only practicable 
guarantee against a surplus, which would constitute 
an actual tax upon those who use the mails and 
might lead to extravagant methods, would adequately 
excuse the student from considering methods of 
eliminating the present deficit. If the discussion 
could serve no other purpose, there would in fact be 
little reason for its introduction. Such, however, is 
not the case. It is quite possible that it may con- 
tain or lead to suggestions which may materially im- 



156 THE POSTAL DEFICIT. 

prove the postal service by pointing the way to 
important economies. 

Only the heads of such a discussion will be intro- 
duced. The first inquiry in this direction would 
probably be addressed to the organization of the 
postal department. Is that organization as efficient 
as possible and as economical as justice to its many 
loyal and able employes will permit ? This ques- 
tion might have been raised earlier with perfect 
propriety, for the just application of the principle of 
public utility to the question of railway compensa- 
tion would require economy in the postal service 
equal to that in the railway service. If postmasters 
and other postal employes receive higher pay or 
serve less efficiently than the corresponding em- 
ployes in the railway service, it would be necessary 
to require the substitution of a condition of substan- 
tial equality before rediicing railway mail pay. To 
neglect this would be unjust to railwa^y employes. 

The antagonism of the Post-office Department to 
the present situation in regard to second-class mail 
matter is universally familiar. The officers of the 
Department are apparently firm in the opinion that 
the elimination of what they regard as the abuses of 
the present system in connection with this class of 
mail would create a balance between postal reve- 
nues and expenditures. The present writer is not 
certain that this would occur but the suggestion 
merits investigation. On the other hand, it is not 
impossible that a different adjustment of rates might 



THE POSTAL DEFICIT. 157 

be effected without interfering with any legitimate 
mail business. Without expressing any opinion as 
to the probable result of such an investigation, it 
may be suggested that the imposition of zone rates 
on other than first-class matter might not in any way 
restrict the present volume of mail traffic. This 
might require the reclassification of the lower forms 
of mail, and it would very possibly be found desir- 
able to accept mail shipments of greater weight than 
are now taken. The principle which justifies rates 
regardless of distance does not apply with equal 
force to all kinds of mail matter, and there is cer- 
tainly some reason for contending that to some of 
them it does not apply at all. The possibility of 
radical reorganization of American postal practices 
in regard to the less remunerative forms of mail 
surely deserves more attention than it has appar- 
ently received. In examining it, however, it will 
not do to overlook the powerful opposition that 
would be aroused should material increases in 
charges be urged, unless they could be accompanied 
by changes that would increase the value of the 
postal service to those who avail themselves most 
largely of the facilities for transporting periodicals, 
books, and merchandise ofi'ered by the Government. 
The concluding suggestion relates to the possibility 
of securing greater revenue by preventing the com- 
petition of private concerns with the postal depart- 
ment in the transportation of the lower forms of 
mail, just as such competition has been excluded in 



158 THE POSTAL DEFICIT. 

the case of first-class mail. The difficulty of effect- 
ing such a change is a strong reason against regard- 
ing it, at the present time, as a practicable remedy, 
but it is possible that postal development may yet 
make it necessary. 



